Even in the best economic times, debt settlement is an option that many consumers consider when they are struggling to make ends meet, and are faced with a sudden and tough financial situation. Financial hardship can come from many different sources; it could be a debilitating injury, prolonged illness that prevents you from working or the loss of a job entirely. During these tough financial times, many residents in Tennessee and across America have racked up thousands of dollars in credit card debt. If you are in a similar situation, there is good news.
Today, there are several debt relief options available to consumers struggling with debts from credit cards and other types of unsecured debts like medical bills, department store charges, or utilities. One option is debt settlement, which is becoming increasingly popular among consumers who need relief from high-balance credit cards, typically $20,000 or more. Working with debt settlement specialists, the goal is to settle or negotiate with creditors for substantially less than what the consumer owes. Another viable debt relief option is debt consolidation, or a debt management plan (DMP).
What debt consolidation typically involves is combining all your debts into a single and more simplified payment made to a credit counseling agency. These days, both debt relief options have increasingly become popular alternatives to consumers who want to avoid bankruptcy - which is a type of debt relief, but one that has, unfortunately, a more devastating and longer lasting impact on credit.
To explore your debt relief options and see how much you can save, answer a few, simple questions and get a free debt relief analysis and savings estimate. Begin now.
"Pros and Cons of Settlement"
For many consumers who are struggling with high balances on multiple credit cards, debt settlement is becoming a popular debt relief option. By settling debts, you can save a substantial amount of money and allow youself to potentially settle credit cards in as little as 12 to 36 months. When you enter a debt settlement program, the goal is to negotiate, or "settle," with creditors for significantly less than what's owed. However, like other debt relief options, debt settlement has potential risks:
With debt settlement, your credit score will typically decline because the process involves "falling behind" on your payments in order to save up funds, over an extended period of time, that you can use to make a settlement offer (or a lump-sum amount). As you fall behind in making your payments, you will likely see your credit score go down, particularly if you had good or excellent credit prior to starting the debt settlement process. In addition, many consumers entering a debt settlement program can face legal action for, essentially, defaulting on the terms of their credit card agreements.
But in spite of the risks, debt settlement has become a popular alternative for consumers who want to avoid bankruptcy, which has a more damaging and longer lasting impact on one's credit.
"How Can Consolidation Help Me?"
While debt settlement may be a viable debt relief option for those who are struggling with credit card debts, it is not the only option available. As noted earlier, debt consolidation or a debt management plan can also help.
Debt consolidation allows you to combine all your high-interest credit card and unsecured debts into one, more manageable, and more structured payment made to a credit counseling agency. Credit counselors typically submit proposals to your individual creditors asking for a reduction of interest fees and elimination of late fees or other penalties. Those creditors that agree to extend the proposals are then placed into a debt management plan.
The goal is of debt consolidation is to help you pay your debts sooner than if you only continued to make the minimum monthly payments at higher interest rates. If followed faithfully, debt consolidation can offer you a more predictable and accelerated plan to manage and get out of debt.
Choosing a Debt Relief Program
It can take some time to reach a settlement agreement with creditors. If you are not comfortable negotiating on your own, you can seek the help of a reputable debt settlement company or a credit counseling agency. As noted earlier, a credit counseling agency can work with creditors, on your behalf, to get you reduced interest rates and/or removal of certain late fees and penalties. A debt settlement agency, on the other hand, can also help many consumers negotiate a significantly reduced amount of debt and save some money in the process.
The bottom line is, if you are overwhelmed with debts and want to regain control of your finances, there is a debt relief option that can certainly help you not only pay down your debts, but also give you a fresh start. Compare your debt relief options today by simply answering a few questions to request a free debt relief analysis and savings estimate.