How Debt Relief Programs Work

Many people go through problems with debt and it is important to know the options that are useful and affordable. It is a global problem and studies have been done to understand the issue and create relief measures through cooperation between creditors and the debtors. The key ones found were debt settlement, debt counseling and debt consolidation. It is still difficult for these programs to work.

Debt relief Programs are available in several forms. The first question though is what does debt relief mean? It is a way to manage your curso community manager debt so that you can eliminate it and live with less and manageable debt. It is advisable to seek the services of a qualified and certified consumer credit counselor. This is the only way you will be assured that you are not being scammed. This will involve educating you on financial options available. They help you on budgeting, debt management, mortgages that have gone bad, credit and debt, home buying and bankruptcy.

Ways Debt relief works

The steps involved include stabilizing home finances by budgeting your finances. You can then learn more about debt relief online and then contact creditors once you have managed the finances and explain the problem. This way you can come up with a repayment plan and discuss a discount on the debt. The lack of financial availability will enable you to negotiate a lower interest rate or a large discount on your debt. This will ensure that you avoid going to big debt.

There are three options:

Debt Management Plan

You enroll in a debt management plan that involves paying monthly deposits to your credit counseling agency. The credit counseling agency will have renegotiated your interest rate and got you a lower one. This agency will pay your creditors. For each payment they make they earn some money. This is a long term program that can take between 30 to 60 months to complete.

Debt Settlement

In this scenario the debt relief companies will negotiate with the creditors for you. Your creditors will be offered to take less than what you owe and you pay a lump sum. This lump sum is given to the debt relief company, which keeps a percentage of it and pays the rest to your creditor. This is a common method that helps the borrower clear the nagging debts that holds him back.

Debt Consolidation

If you have many debts then this can be combined to a single debt. It means you take one loan to pay all the debts and remain with this single loan to pay. This will decrease the installments you will pay monthly. This will be a restructured loan that is payable in less than five years. This will require that you hire a debt relief agency to assist you negotiate their terms. They can also assist manage your finance s and live debt free.

Problems of Debt Relief Management companies

• Some debt relief programs are not credible. They debt relief company may offer to lower interest rates or slash the amount of debt and cause you to pay more in fees and penalties if not the same amount.
• Some offer impossible rates of up to 50 or 70 % which are not viable.
• Some of the debt relief management companies are bogus and will scam you and ask for large fees upfront
• Some programs will damage your credit score giving it a negative impact. This is because you will be breaking the original agreement with your creditor and they will report it.

Debt is manageable and it is a preferred option to declaring bankruptcy. There are some companies that have a criterion for debt relief and have certain qualifications to be met. Some of them are listed below.

How to Qualify for Debt Relief

• Accounts must be unsecured
• Individual account balance should be above $ 500
• Total debts owed should be $ 7500 and above

Debts that can qualify

• Credit Cards like Visa, American Express and Visa
• Department Store Cards
• Bank Loans from your previous Bankers
• Loan Installments
• Unsecured or loans with no collateral that are personal
• Business Debts – business should be closed
• Bank, Overdraft that are with a debt collection agency
• Cell Phones not in use
• Veterinary bills exceeding $ 500
• Unpaid Overdue rent where you are not resident
• Judgments that are not over six months with supporting documents