Consumer Debt Relief Options
Millions of Americas are looking for consumer debt relief services? Why? Americans are drowning in consumer debt. Americans struggle maintaining a standard of living, with more of their disposable income paying their debts. Consumer debt relief services provide a series of options and related benefits for Americans to retake control of their financial future. Whatever you have struggling with debt, we’ve got consumer debt relief options that can result in a major improvement in your financial life.
Here are a list of consumer debt relief options together with their potential benefits and drawbacks.
Consumer Debt Counseling
Consumer debt counseling (often referred to as credit counseling) is typically a free resource provided by nonprofit financial education organizations. This option is a review of your household budget, credit reports and consumer debt. The goal is to improve your understanding of your financial situation. Consumer debt counseling can help people navigate a wide variety of situations.
A credit counselor will work with you to help you improve your individual financial situation. Part of that may involve offering tools and resources to help you gain control over your money.
There is a misconception about consumer debt counseling that you must be in dire straits to benefit from it. Consumer debt counseling can be a good resource for those who would like assistance with their credit and financial plans.
There are many factors that come into play in managing your personal finances. These factors include the experience of the third-party debt counseling provider, type of debt, your income, credit score payment discipline, and other factors.
Consumer Debt Consolidation
Consumer debt consolidation (often referred to as debt management) is a process of taking multiple credit accounts and consolidating all of those into one, easy-to-manage account and monthly payment. Only unsecured debt can be consolidated. Unsecured debt includes credit card debt, personal loans, and some types of student loans.
Generally the total amount of debt you owe is not reduced and may increase depending on your financial discipline.
If you are not experiencing a financial hardship, consumer debt consolidation offers a means of reducing your average interest on your unsecured debt and financial costs.
There are many factors that come into play in the debt consolidation process to get you the best possible average interest rate. These factors include the experience of the third-party debt consolidation provider, type of debt, your income, credit score payment discipline, and other factors.
Consumer debt settlement (also known as debt negotiation or debt forgiveness) is a process that is designed to help you reduce the amount of debt owed to your creditors, save as much money as possible, as quickly as possible. The negotiations with your creditors is normally managed by a debt settlement third-party provider. To qualify for this consumer debt relief option, you must be experiencing a financial hardship (divorce, medical illness, loss of job, etc.), be several months behind in your debt payments, with little likelihood for improvement.
Only unsecured debt can be settled and reduced with your creditors (similar to the consumer debt consolidation option).
You fund a monthly agreed amount of money into an escrow account that only you control. As money accumulates in the escrow account, the debt relief settlement provider starts negotiating with your creditors to reduce the amounts and accept early payments. This will often include reviewing debt collection laws to identify violations on behalf of the creditors or collectors.
The debt settlement provider advises you when an agreement is reached with a creditor to reduce the debt amount. You agree and then authorize payment and release funds from the escrow account. This process then continues until another creditor agreement is reach. Why does your creditor have an incentive to negotiate an agreement? Because the alternative is not receiving any payment (due to your hardship condition) and possibility of declaring bankruptcy.
There are many factors that come into play to get you the best possible debt settlements. These factors include the experience of the third-party debt settlement provider, the age and type of debt, your future prospect for making payments, the state you live in and other factors.
Consumer Debt Bankruptcy
Simply put, consumer debt bankruptcy is when you owe more than you can afford to pay. Filing for bankruptcy is a difficult decision, and many experts consider it to be a last resort. Before moving forward, be sure to consider the previous consumer debt relief options.
To determine where you are financially, inventory all of your liquid assets: retirement funds, stocks, bonds, real estate, vehicles, college savings accounts, and other non-bank account funds. Then, collect and add up your bills and credit statements.
If the value of your assets is less than the amount of debt you owe, declaring bankruptcy may be one way out of a sticky financial situation. You shouldn’t consider this option with seeking legal advice.
You can go bankrupt in one of two main ways. The more common route is to voluntarily file for bankruptcy. The second way is for creditors to ask the court to order a person bankrupt.
There are several ways to file bankruptcy, each with pros and cons. You should consult a lawyer so you can figure out the best fit for your circumstances.
Four consumer debt relief options are recommended based on debtor financial difficulty. These include 1) Consumer Debt Counseling; 2) Consumer Debt Consolidation; 3) Consumer Debt Settlement; and 4) Consumer Debt Bankruptcy. Being in debt can become a very stressful situation that might seem easier to ignore than deal with. Luckily there are various consumer debt relief options to help you get out of debt and on the path towards financial freedom.
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