Debt Relief Options

Are you struggling with debt?  You are not alone.  Millions of Americans are struggling with sky-high credit card interest rates, stagnant wages, and unstable employment.  If you are looking for a way to resolve your debt, take some time to weigh the pros and cons of your different debt relief options.  The important thing to know is that there is no one-size-fits-all solution.  The solution that is right for you depends on your specific circumstances.  As a member of the Freedom Financial Network, Freedom Debt Relief can help review your options and figure out which solution is best for your particular situation.

Bankruptcy - Bankruptcy is generally considered to be an option of last resort. The negative effects follow you for years, as the record of your filing bankruptcy stays on your credit report for as long as 7-10 years. Changes in bankruptcy law have made it more difficult to qualify for a Chapter 7 bankruptcy – the type that typically can completely discharge the filer's obligation to repay their debts – pushing more bankruptcy filers into Chapter 13 bankruptcy, which is a reorganization of your debts and a plan to repay at least a portion of those debts over time.

Credit Counseling - Debt management plans offered by credit counseling agencies may be effective for people who need moderate monthly payment relief due to high interest rates.  By getting lower rates from your creditors, credit counselors can speed up the time it takes you to pay off your debts.  If your financial situation is more serious and requires more than a slight reduction in monthly payment obligations, then credit counseling may not be able to help you.  Your monthly payment in a credit counseling program is often not much lower than your required credit card payments, and is typically higher than that of a debt negotiation program –so, if you are already having trouble making your credit card monthly payments, credit counseling may not work for you.

Debt Consolidation - Debt consolidation can be a good solution for people who are not in serious financial distress. To qualify for a debt consolidation loan, you generally need strong income and great credit. The most common form of a debt consolidation loan is a cash-out refinance, using equity in your home to pay off credit card debt.  Note, however, many homeowners don't have enough equity or the credit rating to qualify for a loan.  If you do qualify for a loan, understand that you are effectively shifting unsecured debt into new debt that is secured by your home, which places your home in jeopardy should you be unable to make payments on your new debt consolidation loan.

In addition to using a mortgage to consolidate your debt, unsecured debt consolidation loans are available to some people, although they can be hard to qualify for depending on your financial and credit situation.  Furthermore, they usually carry a relatively high interest rate.

Debt Settlement - Debt settlement, also known as debt resolution, credit advocacy or debt negotiation, is an aggressive debt relief approach that is designed to help consumers with a financial hardship resolve debt in 24-48 months*.  Your negotiators handle communications with your creditors, working to negotiate reduced balance payoffs for you.  Debt negotiation is often the cheapest way to resolve your unsecured debt while avoiding bankruptcy.  Your monthly program payment will generally be significantly lower than your current minimum payments and our fees are not charged until after you see results.  The downside, however, is that debt negotiation could adversely affect your credit rating and you could receive calls from debt collectors.  But, if resolving your unsecured debt quickly for a low total cost is your number one priority, debt negotiation might be the right solution for you.

Minimum Payments - If you are scraping by each month, sending enough to your creditors to meet your required minimum monthly payments, it may seem that your balances never come down. If you add up the total costs of years of making minimum payments, you will see that you will pay back far more than you owe and, equally importantly, it may take you literally decades to pay off . Many people choose to continue on this treadmill hoping that something will change, but if you are struggling to make ends meet while making minimum monthly payments, and are not seeing your debts go down, you owe it to yourself to look at the different alternatives that are available.