For many people, reducing or paying off debt alone is not easy. The cost of simply living life is expensive. Car payments, medical bills, utility costs, and mortgage payments are common expenses people have and that doesn’t even cover other living expenses like groceries.
When credit card and personal loan debt enter the mix, trying to pay all of these bills, let alone pay them off becomes very difficult to do. If you’re someone that is facing this difficult and stressful situation, consider using debt resolution to give you a fresh start. Here are 10 ways debt reduction programs work.
It Addresses Your Accounts
Juggling the many bills that come with life is familiar to people in debt. But it becomes even harder when you get behind on credit card and loan payments. Trying to pay active accounts along with closed ones is a strain on any budget. One of the great things about debt reduction is that all of your accounts are addressed, even if they are closed. This not only makes it easy for that debt to get paid but also to ensure you have a better history with creditors when you do start fresh and have credit.
Finally, debt reduction helps with your budget because the payments you’re making include all of the accounts you want to pay, not just the ones you can afford to pay.
The Program Works for Your Situation
Everyone who considers debt resolution or decides to enter a program has a different set of circumstances. The number of accounts, type, income, and obligation level varies from person to person. That’s why debt resolution programs spend a good deal of time learning about your financial situation so that it addresses all the accounts you need help with at an affordable cost.
It’s a significant difference from other solutions like consolidation loans or credit management. While each option varies slightly depending on your financial situation, they don’t achieve the same level of personalization.
Debt Resolution Ends Minimum Payments
Obtaining a debt consolidation loan or entering a debt management program doesn’t necessarily put an end to paying the minimum on your credit cards. Taking a loan still means that you’ll be paying the minimum on your loan at the very least, assuming you’re able to qualify for one.
Debt management programs also work with you to pay down debt. However, unlike debt resolution programs, debt management programs only lower interest rates and minimum payments. Such programs have established relationships with creditors to make these adjustments.
For people in heavy debt, this does not necessarily provide the relief they need. Depending on the number of accounts enrolled, payments to a debt management program are comparable to the amount of money you’re already paying toward existing debt which means achieving resolution may take awhile.
Debt resolution services, by contrast, have payments that are determined by what the client affords and takes into account every financial obligation they have. This ensures the client actually gets out of debt and not into more debt.
No More Interest
Credit cards accrue interest with each passing month. If your credit cards have a high-interest rate and a high balance for a long period of time, very little of a minimum payment actually applies to the balance. Instead, most of it goes to the interest which does very little to pay off the debt. This is one reason why getting out of debt is so difficult and why debt resolution services help clients.
Debt resolution services resolve debt by reaching an agreement with the creditor directly or that creditor’s representative. The settlement is often for much less than your full balance, in part because it does not include interest. This is one way that debt resolution helps you take steps toward being debt-free instead of getting stuck paying minimums that don’t clear up a lot of debt.
Debt Resolution Services Resolve Debt with Your Creditors
If part of your active debt load includes closed accounts or those not paid on after 180 days, your debt on one or more accounts might have been sold to another entity. While selling debt to a third party is fairly common, there is a risk that you could fall prey to debt scams and pay money for a debt scam that ends up not being connected with your original creditor. If this happens, you’ll still owe the debt in question and be out the money.
When addressing collection agencies, it’s important to understand your rights and the tips to follow regarding how payments are made. Debt resolution services are pros when it comes to this. They will only deal with the creditors and those agencies authorized to collect on the debt and make sure actual debts in question get paid.
You Save Money On Your Debt
Adding up all of the debt you owe isn’t easy and the final number may seem impossible to get out from under on your own. When you enroll with a debt reduction service, you’ll save money on the debts you owe. Some of these debts will be settled for far less than the original balance because you will have skilled negotiators working to get you the best deal for every creditor. The money saved depends on the specific creditor. But just like the freedom from interest, a debt reduction service helps save you some money on your overall debt so you can become debt free faster.
Debt Reduction Services Don’t Require Payments Upfront
When you’re strapped for cash, working out payments for different creditors is stressful because you have to make sure you have the money and save it. Debt reduction services don’t require upfront payments. The payment for the service is taken when debts are paid off or are nearing completion. Small fees such as those for a phone payment or delivery fee are also factored into the payment you make every month.
As a result, you won’t go into deeper debt in an attempt to make payments to the service. In addition, debt reduction services work with you so that your debt is always paid first before their fees are deducted.
Debt Resolution Takes Only A Few Years
The minimum payment warning on your credit card statements tell you that it will take years to pay off your debt if you make the minimum payment and charge nothing else to your card. Add all of the accounts you pay on and you will pay on your debt for up to ten years or more. Even reaching an agreement with a creditor takes time if you have multiple creditors to pay. Debt resolution take between 24 and 48 months to complete. This means all of your enrolled accounts are paid and you’re out from under large amounts of old and more recent debt.
At the end of your time in the program, your credit will be in better shape and you’ll still have relationships with creditors, only without the debts that were holding you back.
Debt Resolution Helps You Avoid Bankruptcy
People who have significant debt and who are unable to get approved for a consolidation loan may be advised by credit counselors that bankruptcy is their only option. Bankruptcy costs money, time, and is devastating to your credit. While debt resolution does impact your credit and requires dedication and time, it’s a better option for people who have a lot of credit card debt and not a lot of money. Debt resolution gets creditors paid and puts you in a debt-free position faster without resorting to bankruptcy and courts.
Debt happens for all kinds of reasons. Most people find themselves in it because of a combination of a lack of financial awareness in their younger days and life circumstances. No matter what your reason is for being in debt, you can get out of it even if it might seem impossible. You have options. Taking advantage of an option like debt resolution is a step toward a debt-free future.