Until Biden’s student debt relief was launched, debt relief programs were blurred into the background as powder cakes. Paying off your debt for only a fraction of what you owe seemed too good to be true, leading most debtors to rule out the option completely. However, knowing what we know now, the demand for debt relief programs and companies has never been higher, as the solution takes the foreground on the list of debt elimination hacks.
5 Simple Steps To Make The Most Of Debt Relief
Beneficiaries swear by debt relief programs and their success in unshackling clients from long-term credit; however, what’s to say for those that have had little to no success with debt relief programs? We’ll tell you- they most likely walked into it blindly. Debt relief, like any debt elimination strategy, requires plenty of planning and cursory attention; don’t dive into it head first; instead, do your homework and then apply some of these steps for effective and satisfactory results.
1. Take Stock Of It All
Identify all your unsecured debts, from your mortgage to your auto loan and medical debts; once you have these noted down, indicate how much you owe in each area (inclusive of interest and tax). The goal is to know the total amount owed to your creditors and deduce your eligibility for debt relief. By general standards, debt relief beneficiaries should have at least $7,500 worth of debt to qualify for the program, and this step is one way to find out.
2. Review Your Finances
Start by checking your credit score; anything above 670 should rank you higher on the eligibility scale. What if it’s lower? Don’t sweat it; some debt relief companies work with clients with a FICO score below 670, although their service package will more often than not include credit counseling to help you build up that current score. The next step is calculating your monthly cash flow; you can get this by subtracting your expenditure from your income- this should help you know how much you can afford to spare on debt relief payments.
3. Shop For Options
Refrain from settling for the first option you see; we cannot stress this enough- often, multiple debt-elimination strategies could work for your situation without paying a debt relief agency. However, if this isn’t the case for you, we’d insist you shop around for programs that meet your interests, budget and needs. Scour the market for the best possible debt relief programs and compare their service packages before deciding.
4. Consult With A Credit Counselor
While some debt relief programs/companies offer their clients credit counseling, others do not. If you’re signed up for a debt relief program that doesn’t offer credit counseling as part of their service packages, you should hire or talk to a non-profit credit counselor; this will help you find answers to any questions or concerns you may have. The counselor will also come in helpful in assessing your finances and customizing a practical debt repayment plan for you.
Tip: Ask your credit counselor for any advice and recommendations they may have for you as you move forward.
5. Understand The Cost
One misconception people tend to have about debt relief is that it’s free. Wrong! Debt elimination through debt relief programs costs a service fee, usually 15-20% of the debt you owe on your accounts. That aside, you’ll still be expected to pay taxes after settlement, so to avoid any mean surprises, it’s best to anticipate these expenses beforehand.
Bottom Line
While the tips mentioned above cut for prominent steps to making the most out of debt relief programs, key considerations like playing it safe go a long way too. Try not to make any major changes to your current situation that will likely affect your finances; this could be a career shift or relocation. You’ll want to keep your payments timely and consistent for this strategy to work, and big moves like quitting your job to start a business are far from it. Lastly, try pinching that monthly expenditure to avoid adding to your financial woes with new debts.