Whether you’re looking to absolve yourself of student loans or struggling to keep up with mortgage payments, debt relief is a solution that’s bound to come up. This promising approach toward debt elimination poses a potent solution for debtors overwhelmed by their dues to creditors. For many, the concept is strange, if not unrealistic. In this article, we look to shed some light on the subject by addressing some of the clients’ major concerns about debt relief. Read on for the scoop.
What Is Debt Relief?
Debt relief can be defined as a measure to reorganize a debt either through refinancing or reduction of interest rates and debt balances. Debt relief also encompasses consolidation, partial or total forgiveness of a debt to offer respite to an indebted consumer.
How Does It Work?
The concept of debt relief is relatively simple. Once you’ve signed up and qualified for debt relief, a debt relief company takes on negotiation with your creditors for lower interest rates and payments. When the negotiations are nailed down, the debt relief agency will customize a payment plan for you and sometimes include complimentary services like debt management classes and credit counseling to steer you away from future debt. Ideally, the primary goal for these companies is to have their clients pay less than what they owe in debt for a low service fee.
How Long Before I’m Debt Free?
Debt elimination through debt relief programs typically takes 2-3 years; of course, this timeline will vary depending on the size of your debt, monthly contributions, interest rates and the debt relief company hired. With that in mind, it’s advisable to check in with your hired debt relief agency for a close-to-accurate timeline; this should be possible after a financial assessment of your situation.
Will It Cost Me?
Yes. Most debt relief companies charge a service fee significantly lower than your debt. While there is no definite answer to how much you should anticipate paying, we’d estimate 15-25% of the debt owed. As you’ll find, each debt relief program will have distinct closing fees based on the creditor, interest rates, taxes, company and service package offered to you. Ultimately, your debt relief company should give you a quote or estimate in the initial stages of consultation.
Will It Affect My Credit?
If your debt relief package includes credit counseling and management, you should expect little to no impact on your credit score. However, if your debt relief program works through debt negotiation or settlement approaches that entail halting payments to creditors, your credit score will undoubtedly be thrown into a wrench.
Are Debt Relief Programs Legit?
Yes, debt relief programs are legitimate; nevertheless, there is a handful of them that are questionable or fraudulent. For this reason, you are strongly advised to carry out intensive background checks on any potential debt relief programs before signing up. Be sure to look for certifications, proven track records, ratings and accreditations with the Better Business Bureau and Fair Credit before sending your credentials to these programs/companies for safe play.
Final Takeaway
Debt relief is no doubt a viable and legitimate approach toward debt elimination. If you’re looking to shed off some of the debt weighing you down but are considerably tight on finances, looking to debt relief programs might be the call for you. These programs will help secure a lower repayment of the debt owed and go as far as setting your finances on track through expert financial advice and guidance. What’s more, this option gives debtors the liberty to use debt relief companies, so they don’t have to stress out over the technicalities of the process; the agency in question will handle everything for you, from negotiations to settlement and everything in between.