Finding Debt Relief
09 Desember 2009
Headlines, television commercials and email solicitations make all kinds of offers for debt settlement to consumers. There are a whole range of programs that will help people reduce their interest rates, monthly payments or total debt consolidation burdens. While all offers promote the financial freedom and easing of stress that using a plan for credit card debt might bring, not all are open and honest about the total effects of certain plans.
For example, some debt relief programs see a consumer’s credit accounts closed, balances negotiated down to pennies on the dollar and their credit score in ruins. This does free the individual from a high burden of debt, but it also greatly reduces their access to any kind of credit for the next seven years or more. This is the main reason that anyone considering a debt relief program MUST review all of the terms and conditions before entering into the arrangement.
Alternately, there are debt relief programs that actually just help the consumer to get themselves organized and make effective payments against their balances. For example, there are several online tools and programs that allow the individual to enter all kinds of data about their debt load and then the computer assesses the information and provides a week by week calendar demonstrating the fastest and most efficient way of paying down the debt.
One of the most common approaches to debt relief is through a consolidation loan. This is usually done by or through a credit counseling service which works with the consumer and their creditors. The counseling service contacts all of the creditors and seeks to have interest rates reduced, balances negotiated and a payment arrangement organized. The service then puts the consumer on a monthly payment plan that requires only a single payment per month, which the counseling service distributes accordingly.
This makes it very simple to approach a large amount of debt, but there are some issues that must be addressed before making any arrangements with such a service. First, the consumer must decline offers that require accounts to be closed. This is because closing consumer accounts knocks points off a credit score. Next, the consumer should scrutinize the amount of each month’s payment that goes to creditors versus the amount going to the debt relief service. At no time should the service receive funding in an amount larger than that going to paying down debts. Finally, the consumer should ensure no harm has been done to their overall credit score through the negotiation process as this would defeat the purpose of using such a service.
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For example, some debt relief programs see a consumer’s credit accounts closed, balances negotiated down to pennies on the dollar and their credit score in ruins. This does free the individual from a high burden of debt, but it also greatly reduces their access to any kind of credit for the next seven years or more. This is the main reason that anyone considering a debt relief program MUST review all of the terms and conditions before entering into the arrangement.
Alternately, there are debt relief programs that actually just help the consumer to get themselves organized and make effective payments against their balances. For example, there are several online tools and programs that allow the individual to enter all kinds of data about their debt load and then the computer assesses the information and provides a week by week calendar demonstrating the fastest and most efficient way of paying down the debt.
One of the most common approaches to debt relief is through a consolidation loan. This is usually done by or through a credit counseling service which works with the consumer and their creditors. The counseling service contacts all of the creditors and seeks to have interest rates reduced, balances negotiated and a payment arrangement organized. The service then puts the consumer on a monthly payment plan that requires only a single payment per month, which the counseling service distributes accordingly.
This makes it very simple to approach a large amount of debt, but there are some issues that must be addressed before making any arrangements with such a service. First, the consumer must decline offers that require accounts to be closed. This is because closing consumer accounts knocks points off a credit score. Next, the consumer should scrutinize the amount of each month’s payment that goes to creditors versus the amount going to the debt relief service. At no time should the service receive funding in an amount larger than that going to paying down debts. Finally, the consumer should ensure no harm has been done to their overall credit score through the negotiation process as this would defeat the purpose of using such a service.
