With the horrific tragedy of the Tubbs fire and the loss of more than 2,800 Santa Rosa homes a fresh memory; dealing with financial problems only adds insult to injury. While there are a number debt relief options available for Santa Rosa residents, finding the best path out of debt can be somewhat involved. Among the possibilities are debt consolidation, counseling and settlement. Here’s how to decide which is best.
The First Step: Assessing Your Situation
Assessing your situation before considering any of the following plans is critical to your success. Create a list of all the bills you pay each month (including your rent/mortgage, phone, water, utilities and insurance). Record the name of the debtor, the outstanding balance and the interest rate (where appropriate) as well as the amount of the monthly payment. Calculate the sum of the monthly payments and compare that number to your monthly income. If your income outpaces your debt, you ‘re probably in better shape than you thought.
If it doesn’t, don’t worry, you still have options.
Credit Counseling Services
You’ve got questions, and they’ve got answers. Credit counselors help improve your budgeting skills by sharing credit management techniques and provide you with an overview of your financial situation. This service can help you re-prioritize your budget to free up cash to better meet your obligations, while still taking care of your household expenses.
Debt Management Plans
When credit counseling isn’t enough on it’s own, a counselor will usually recommend enrolling in a debt management program. Within this strategy you’ll deposit money into a secured account each month, which the debt manager will use to pay your unsecured debts (these include credit card bills, medical payments and the like). Debt managers will also ask your creditors to lower your interest rate or waive accumulated fees to better facilitate paying off your debts.
Keep in mind that you will see a decrease in your credit score as a result of this approach, but the payoff is that your balances may be cleared up much sooner.
Debt Consolidation for Santa Rosa Residents
A debt consolidation loan can be a favorable solution, particularly if your credit score is healthy and stable. This method allows you to combine all of your credit card and other revolving debts into one account and usually at a lower interest rate. This will make the money you’ve been paying on each bill separately go farther. Another perk of debt consolidation for Santa Rosa residents is the possibility of lowering the total debt owed and negating for a lower interest rate as well.
Debt Settlement Firms
Debt settlement firms negotiate with creditors to settle for less than the current outstanding balance. Then, the debt settlement company uses the funds that the debtor has saved up in his or her account to pay the creditor according to the settlement agreement. While this is similar to what debt managers do, settlement firms also ask the lender to forgive a portion of the principal loan amount.
To build up the cash to comply with these agreements you’ll stop making payments to your creditors each month. Instead, you’ll deposit the money into a secured FDIC-insured escrow account each month. When there‘s enough money in the account to pay off a lender, the funds will be withdrawn from the account to satisfy the agreement.
While this is an effective technique, certain types of debt are exempt from settlement agreements. Mortgages, government-backed student loans and car loans cannot be satisfied in this fashion. You should also know the IRS considers the forgiven portion of debts as income, so there may be tax concerns to contemplate.
Request a free debt evaluation to find out how we could help you:
- Resolve your debt faster
- Significantly reduce what you owe
- Make one low monthly program payment
Debt Relief for Santa Rosa Residents
Finding a good path out of debt is doable. It’s simply a matter of taking stock of your situation and determining which of these options will be the most favorable route to your solution. If you’re a Santa Rosa resident, you can also seek professional assistance in this regard.
Freedom Debt Relief has helped thousands of people just like you get their finances back on track. Your ideal solution is just a phone call away. Freedom Debt Relief has experts available to discuss the possibilities with you seven days a week. Best of all, these consultations are absolutely free.
Call 800-910-0065 today to take advantage of this free advice.