Four types of debt relief programs

Four types of debt relief programs

Debt relief for the average individual.

With nearly 55% of the American households having at least one credit card and holding $7104 of debt in 2019, many people naturally ask the question, how can I get out from under this mess? There are several options including debt relief programs, bankruptcy, and budging programs just to name a few. Let’s review the four main types of debt relief programs which include debt settlement, debt consolidation, debt assumption, and debt validation. First up, we will focus our attention on debt settlement.

What is debt settlement?

Debt settlement is a negotiated agreement by which a creditor accepts less than the total amount owed to legally satisfy a debt.

How long do debt settlement programs last?

The length of time that debt settlement programs depends on the company with whom you are working. Generally, debt settlement programs will last anywhere from 12 to 48 months.

What determines the length of a debt settlement program?

There are several factors that will go into determining the amount of time you may spend in a debt settlement program. Some of those factors include delinquency of accounts, creditors, number of accounts, and the total amount of debt you are placing into the program.

How much can I save by going into a debt settlement program?

The amount saved on your debt varies from person to person, again being determined by a host of factors. However, typically people that enroll in a debt settlement program may have their debt settled between 40 to 70% of the original balance that they enrolled into the program.

How are my debts settled with my creditors?

This depends on what your debt settlement company can arrange with each creditor you enroll. Generally enrolled debts are either settled by a lump sum or by monthly payments. These methods are impacted by the amount of funds available through your program. Now lets move onto debt consolidation.

What is debt consolidation?

Debt consolidation is a program where an individual goes to a bank or even sometimes their mortgage company and takes out a loan for the purpose of paying off their unsecured (ie. credit card) debt at one time.

How long do debt consolidation programs last?

Well that is a little trickier to define because you are not working with a debt relief company. It is essentially a loan. The length of time it takes to repay that loan is determine by the lending institution that you are working with. And if you refinance your home for the money to pay off your debt, you could be looking at a 15 to 30 years pay off time.

How does debt consolidation work?

Basically, you collect all the unsecure debt that you want to pay off and then you go to a bank or your mortgage lender, if you are a homeowner. Next you try to get a loan or refinance your mortgage for an amount equal to your debt. If approved, you then use the cash from the loan or refinance and pay off each of your creditors in full.

How much can I save by going the debt consolidation route?

Truthfully you may save nothing; in fact, it may even end up costing you more money! I know that is hard to believe but here is why. Let’s look at if you refinance your home for the money to pay off your debt. First thing to consider is that there are costs involved when refinancing. Also, with the current state of the market, it can be harder to get approved for refinancing. Finally, keep in mind by using this method, you aren’t really paying off debt, you are just moving it; from the credit cards into your home mortgage.

How are my debts settled with my creditors?

Just how many individual debts you can pay off through debt consolidation depends on a couple of things. Firstly, how much debt you have and secondly, how big of a loan you can qualify for. Keep in mind that if you have been delinquent with payments or your debt to income ratios is skewed in the wrong direction, getting a big loan or a loan at all may be very difficult. Now let’s explore debt assumption

What is debt assumption?

Debt assumption is a program that works to offset your debt while helping to protect you from lawsuits and works to restore your credit. It is very difficult to define exactly what debt assumption is because most companies that offer this type of program use company specific proprietary processes.

What types of debt can I enroll in a debt assumption program?

Debt assumption programs you can enroll many different types of unsecured debt such as, medical bills, unsecured credit cards, signature loans, and certain business bank loans to name a few. In fact, even certain types of student loans may qualify for this type of program.

How long do debt assumption programs last?Again, the time-frame can vary from company to company. However, a debt assumption program can last anywhere from 12 to 36 months. Although they can be longer, you just want to make sure to discuss that with the company you are working with to pinned down an exact time-frame.

Will this affect my credit score?

To put it bluntly, yes. Going through a debt assumption program will negatively impact your credit score, how much so is hard to define. However, most debt assumption programs include some type of credit restoration services. Finally, onto the last type of program we will be discussing here, debt validation.

What is debt validation?

Understanding debt validation can be a bit confusing. So, what is debt validation. Debt validation is an auditing process that holds a debtor or a collection agency accountable to established lending, credit, and/or collection laws. This process is critically important because collection agencies and debtors must follow the established laws, they must verify that a debt is legally owned, and that the process for collecting that debt is followed legally.

Why is following the law by debtors and collection agencies so important?

Quite honestly following the law is so important because if the law has not been followed precisely, then the debt cannot be collected! And the fact of the matter is that most debt that is sold from the original creditor to collection agencies end up being pursued by companies that do not follow the letter of the law.

How long is the debt validation process?

The debt validation process can last up to 36 months. Time periods may vary from companies that offer this type of debt relief program.

How will the debt validation program affect my credit?

Unfortunately, if you choose to go the debt validation route, it will have a negative impact upon your credit score. This is a necessary evil; however, many companies will offer a credit repair service in conjunction with this type of program.

What types of debt can be enrolled into a debt validation program?

Typically, unsecured debts can be enrolled but they must have been sold to a third-party collection agency. The debt must be in collection for this program to work because it is based on the law. Once a debt is sold, the buying company must be able to prove that the debt is valid. If they cannot do that, then that particular debt must be forgiven.

For more information about these types of programs or to explore your particular situation in greater depth, please visit with the guys over at Debt Reset US. They are a great group of guys working for a great company. And both are genuinely concerned about your financial well-being. Check them out.

Debt Relief for the Average Individual – Debt Settlement

Debt Relief for the Average Individual – Debt Settlement

Debt relief for the average individual.

With nearly 55% of the American households having at least one credit card and holding $7104 of debt in 2019, many people naturally ask the question, how can I get out from under this mess? There are several options such as debt relief programs, bankruptcy, budging programs just to name a few. Focusing our attention on debt relief programs, let’s explore one specific type, the debt settlement program.

What is debt settlement?

Debt settlement is a negotiated agreement by which a creditor accepts less than the total amount owed to legally satisfy a debt.

How long do debt settlement programs last?

The length of time that debt settlement programs depends on the company with whom you are working. Generally, debt settlement programs will last anywhere from 12 to 48 months.

What determines the length of a debt settlement program?

There are several factors that will go into determining the amount of time you may spend in a debt settlement program. Some of those factors include delinquency of accounts, creditors, number of accounts, and the total amount of debt you are placing into the program.

How much can I save by going into a debt settlement program?

The amount saved on your debt varies from person to person, again being determined by a host of factors. However, typically people that enroll in a debt settlement program may have their debt settled between 40 to 70% of the original balance that they enrolled into the program.

How are my debts settled with my creditors?

This depends on what your debt settlement company can arrange with each creditor you enroll. Generally enrolled debts are either settled by a lump sum or by monthly payments. These methods are impacted by the amount of funds available through your program.

For more information about debt settlement or to explore your particular situation in greater depth, please visit with the guys over at Debt Reset US. These guys and their company truly care about your financial health. Your debt relief may be just a single click away.

Are Debt Relief Programs Legitimate?

Are Debt Relief Programs Legitimate?

Everyone asks when looking for a way to deal with their credit card debt, are debt relief programs legitimate? So, are they?

Like almost everything else in life, whether it be in business or in personal relationships, there are good and bad examples. This holds true for debt relief programs as well. There are plenty of examples of debt relief companies truly working hard for their clients, helping them get out of debt. Of course, then there are examples of companies looking to make a quick buck at their client’s expense. The fact of the matter is if you are considering entering a debt relief program you need to do your due diligence and research the company you are entertaining working with to help you get out from under your debt. There are plenty of legitimate debt relief programs; but just be aware that there can be some less than reputable programs out there as well.

What are the different types of debt relief programs?

As with most consumer products or services, there are quite the variety of programs to choose from. However, there are four basic types. In no order, firstly you can choose to enter into a debt settlement program. Debt settlement is when you or a company that you partner with work directly with your creditor(s) to payback a percentage of the total debt you owe and have your account(s) deemed as ‘paid in full’.

Or you can investigate debt consolidation. Debt consolidation is where you take out a personal loan from a bank or credit union in the amount of your combined debt. By doing this you use the loan money to pay off all your creditors leaving you with one monthly payment to the bank or credit union. Don’t forget that there are different debt consolidation programs for different types of debt, such as unsecured debt, student loans, and back taxes to name just a few.

Then you can always turn to bankruptcy, as a last resort hopefully. There are two common types of bankruptcy, Chapter 7 and Chapter 13. Chapter 7 is used mostly for unsecured debt, such as credit cards or personal loans, or medical bills. However, bear in mind that it may not eliminate all your debt. There are some requirements you may need to meet and some consequences that you need to be aware of if you decide to go this route. A consultation with a bankruptcy attorney is highly recommended and usually free for the initial consultation.

Chapter 13 bankruptcy has a different set of requirements to be met than Chapter 7 and is generally a longer process. Generally, this goes through a court where a payment plan is setup and if all the payments are made during the bankruptcy, generally 3 to 5 years, the remained of the debt is forgiven. Again, it is best to consult with a bankruptcy attorney to explore this option.

Do I need to use a debt relief company?

The short answer is no. However, let’s be honest, you probably want out from this situation as soon as possible. I’ve been there; I know just how stressful and frankly painful it is to live under a crushing amount of debt. Nobody likes worrying about how to make ends meet and pay all of the bills at the end of the month. It is also human nature to want to relieve that pain as soon as possible. You can, legally, reach out to your creditor(s) on your own and negotiate a lower interest rate, a lower payment amount, or a settlement amount. Reality check, most of us do not have the time, know-how, or inclination to tackle negotiating with credit card companies.

Therefore, you might want to work with a debt relief company. Simply put legitimate debt relief companies have more experience and the proprietary processes to successfully negotiate with your creditor(s). They know what questions to ask and how to work out the best plan on your behalf. They also have created specific proprietary processes that work. This means you as a consumer will have to go through trial and error which could end up being extremely costly.

How can I tell if a debt relief company is legitimate?

So, you’ve decided, like thousands of other people in the same situation, to partner up with a debt relief company. Now what? You want to make sure and have the peace of mind knowing that the company you are going to do business with is legitimate. Your first stop may be to the website of your local Better Business Bureau or the BBB.

The BBB is a nonprofit organization whose focus is primarily on consumer protection. How it works is businesses ‘join’ or affiliate themselves with the BBB and agree to adhere to the BBB’s standards via self-regulation.  In turn, the BBB vets businesses on 17 factors that produces a rank between F through A+ for that business. The BBB also allows consumers to file complaints against a company. The BBB then works with the consumer and the company to positively resolve the complaint. Keep in mind though, that membership or affiliation with the BBB is not a requirement for any company to conduct business.

Another avenue to see if the debt relief company that you are thinking of working with is legitimate is to contact the FTC of Federal Trade Commission, via their website, and ask if any complaints have been filed against the debt relief company. One final way is to contact your State’s Attorney General’s Office and inquire about any complaints filed against the debt relief company. The responsibility lies with you to thoroughly research the companies that you are considering helping you with your debt situation.

What are the costs associated with debt relief programs?

Costs will vary from company to company. Remember, the debt relief companies are in business to help you but also to make a profit. Usually the company will charge a percentage of the debt that you are placing with them eliminate. Be sure to ask if their fees are due upon starting the program in one lump sum or is it spread out over the term of the program. Fees can range between 15% to 25% of the debt you are enrolling into the program. So, ask questions first!

How does a debt relief program affect my credit score?

Debt relief programs can cause your credit scores. Some relief programs can cause your score to lose half as many points as filing bankruptcy would. I know that sounds bad but keep in mind that if you are only losing half the points, it would be easier to rebuild those points after going through a debt relief program than going through bankruptcy.

The most important thing to remember is to always ask questions. Do not be afraid or embarrassed about asking questions. Getting into a debt relief program is a major deal that comes with plenty of consequences. It’s your money and your credit on the line so do not be shy. If the professional that you are talking with seems annoyed or impatient with your questions, then it might be time to contact someone else. Do not let yourself get railroaded into a program that you do not fully understand and that may not be right for you.

If you still have some questions or concerns, let the guys over at Debt Reset US help you sort through them. They are a knowledgeable bunch that are truly invested in helping people get out from under their debt.