Benefits Of Debt Resolution By Paul Ritz When you are trying to dig yourself out of a mountain of debt, it may seem to be an impossible task. Debt resolution companies can help you to tackle your debt in manageable steps.
Debt Resolution 101 Debt relief companies will analyze your financial situation, determine how much you can afford to pay your creditors on a monthly basis and then negotiate with your creditors on your behalf to bring your repayments in line with the proposal. This is, in part, accomplished by attempting to get your creditors to forgive some of your debt in return for a monthly payment schedule. They will then collect a monthly payment from you and will distribute this amongst your creditors. It is extremely important to make your payments on time as arranged with the company. As long as you keep these payments up, you will find that your debt will not be handed over to a collection agency. You should, however, check with your creditors first whether or not they do grant concessions such as lower interest rates or fee reductions for programs like this one.
Debt Settlement This works in a similar manner – you pay the money over to a third party collection company on a monthly basis – this money is held in anticipation of a settlement being reached with your creditors and is only paid over at the end of the term. A successful negotiation will mean that your creditors will accept this lump sum payment in full and final settlement of the debt. This can mean a reduction in your overall debt.
Which is Right for You? Choosing the right option for you will take a bit of effort. It is advisable to make an appointment with a professional debt relief company – a reputable company will help you to make an informed decision after looking over your overall financial situation. Although the two options look similar on the surface, they have very different implications and it is tough for a layman to decide which option is best overall. The key to making the right choice is to choose a reputable debt relief company. Unfortunately there are a lot of companies out there that are looking to prey on people in a vulnerable state.
Warning Signs The following are warning signs that the company may not be the correct one to deal with: 1) They try to collect fees upfront – they are not legally allowed to do this – they must either reduce or settle your debt first.
2) Unrealistic guarantees – some companies guarantee being able to reduce your debt. The truth of the matter is that there is no guarantee that your creditors will accept the reduced amount. Look out for companies that promise the earth – if the promises seem too good to be true, they probably are. 3) A lack of transparency – the consultant needs to explain the possible negative consequences of each decision to you. If the consultant tries to gloss over this, it could indicate a problem. In any debt management program, your credit rating is going to be affected. 4) They offer a quick fix solution – getting out debt – whether by debt settlement or debt management, is going to take time. Generally speaking, it takes years to start seeing the light at the end of the tunnel again. 5) They need to be open with you about the success rates of debt settlement programs – the truth is that a lot of people drop out of debt settlement programs before their debt is actually settled. 6) They don’t offer counselling on managing your money in the future – this is a big indication of a company that is only out to make money off of you. It is in your best interests and the best interests of the company concerned to help you to properly manage your money – If you learn to manage your money, you will be able to keep to the debt management program that they set up for you – it is a win-win situation for both of you.
Is it Worth it in the Long Run? This will really depend on your own situation. Consider, however, the consequences of carrying on as you are without doing anything – you will just fall further and further behind. You will accrue late fees, additional interest charges and your credit rating will drop. Entering a debt management or debt settlement program is likely to have a similar effect but the benefit is that you will be tackling your debt head on. Creditors are also more likely to try and assist you with a reduction in interest rates and reduced instalments if they can see that you are genuinely battling with a financial hardship but that you are taking responsibility for the debt. Although it is a long process, you will come to the end of it eventually and emerge debt-free. Once the debt is settled, your credit rating will start to recover and you will get a chance at a fresh new start. Debt resolution plans are the first step to a new life.
1-888-703-4948 www.nationaldebtrelief.com