The debt relief methods and debt settlement offer an alternative to bankruptcy in which you work with a debt relief company or professional to lower the amounts owed on debts.
This is usually done by negotiating directly with creditors, but can also be done through companies that are licensed to do this type of negotiation.
The key benefits of debt settlement plans are that they are often quicker than bankruptcy, require no public record of your actions, don’t involve the courts, and won’t damage your credit score as much as filing for bankruptcy will.
However, if you fail to pay off all of your overdue balances within the negotiated period, then what you owe will go back up and come out of what you would have paid.
Plus, you will owe any additional fees and interest that were added to your debt during the settlement period.
There are four main types of best debt relief programs:
- Debt Settlement,
- Debt Consolidation Loans,
- Credit Counseling and
- Personal Bankruptcy.
Why you may need Debt Relief Programs
Debt Settlement is a way to negotiate with creditors for a reduced amount of money owed on personal debts or credit cards.
With this type of company, you send them the entire amount that you have available for debt payment each month until they’ve negotiated lower payments on your behalf.
It’s important to note that while using these services will get rid of some of your bills quicker than trying to negotiate yourself it will leave an impact on your credit score so you should only use it if you’re sure that you can pay for the debt at the end of the settlement term.
Debt Consolidation is when a person borrows money to consolidate all of their existing debts into one single loan, meaning they’ll only have to make one monthly payment instead of dozens.
This will enable them to qualify for lower interest rates and create more breathing room in their budget.
It does come with additional fees and terms that must be met in order for this arrangement to work but it can definitely cut down on anxiety about having so many bills and getting overwhelmed trying to keep up with payments.
Credit Counseling Companies or Debt Relief Companies?
Credit Counseling companies help people learn how to manage their credit score and also provide advice on how they can improve their situation.
They usually work with people who have a lot of overdue bills and want to find a way to deal with them.
Credit Counseling services can also provide advice on how to start building good credit, so choosing the right company will truly depend upon your situation and what you need most.
Personal Bankruptcy is essentially a last resort option for those who have an abundance of financial problems, unpaid bills, and defaulted loans.
Though it can come with a significant amount of stress, anxiety, and consequences in many aspects of life, there are some advantages to filing for bankruptcy which include stopping all pending lawsuits, repossessions, and garnishments while eliminating or restructuring existing debt that has become unmanageable due to fees added onto the balance.
After the process has been completed, a person can start with a clean slate and begin working on their credit score again.
Debt Settlement & Debt Relief Methods
Personal Bankruptcy is the final option for those who are unable to make payments on outstanding debt or need protection from creditors.
This process generally involves filing for bankruptcy, defending against creditors in court, and paying any additional fees associated with the length of time required during the process.
The entire process will be listed on your public credit history, which may impact your ability to achieve financial goals like buying a house or car by making it harder to qualify for loans or getting approved for certain credit cards.
It’s also important to note that bankruptcy should only be used as a last resort when all other methods have failed because it can damage your credit score for up to ten years and negatively impact the way that potential employers, landlords, or creditors see you.
Debt Settlement Method
Debt Settlement is a method of negotiating with creditors for a reduced amount of money owed on personal debts or credit cards.
This type of company will send them an individual’s entire available monthly debt payment until they’ve negotiated lower payments on their behalf.
Debt settlement is typically used when filing bankruptcy isn’t an option because doing this will leave an impact on one’s public credit history which could make it more difficult to obtain loans in the future.
It can also be beneficial if someone has already begun taking steps to rebuild their credit but still needs some help cutting down existing bills until they’re able to pay them off completely.
Debt Consolidation
Debt Consolidation is when a person borrows money to consolidate all of their existing debts into one single loan, meaning they’ll only have to make one monthly payment instead of dozens.
This will enable them to qualify for lower interest rates and create more breathing room in their budget.
It does come with additional fees and terms that must be met in order for this arrangement to work but it can definitely cut down on anxiety about having so many bills and getting overwhelmed trying to keep up with payments.
Credit Counseling companies are non-profit organizations that are often funded by local, state, or federal grants as well as donations from community members.
They help people learn how to manage their credit score and also provide advice on how they can improve their situation.
Most of these companies provide services for free or they’ll charge a small fee based on what someone can afford to pay.
Note: Credit Counseling services are often used in conjunction with Debt Settlement, Debt Relief, and Debt Consolidation so individuals can learn how to better manage their money but also try different options if one method isn’t working for them anymore.
Best Debt Relief Programs & Debt Settlement Companies
Here are the top 5 best debt relief programs and debt settlement companies:
1) Balance Financial
Their services are completely free, there’s no obligation to continue making payments once an agreement has been made and money is often returned if they don’t settle your debt within 6 months.
They’ll get you matched with a local debt counselor who can work on your behalf to help get creditors to agree to settlement offers.
2) Freedom Debt Relief
This company was started in 2003 by former credit card review employees who had extensive experience working with people struggling to pay off outstanding bills.
Since then, they’ve grown into one of the top debt relief companies in the United States because of their success rates and Transparency Pledge which ensures 100% satisfaction or fees are refunded.
They’ll charge 15% but this is deducted from any amount that’s settled on your behalf.
3) National Debt Relief
Their services are free to use, they’ll work with you over the phone and settle on a monthly payment arrangement that works best for your budget.
If you don’t like the program they find for you, you can walk away with no strings attached.
4) GreenPath Financial Wellness
This company was founded in 1991 by two former BK7 real estate investors who had previously built up high-interest credit card debt after making poor financial choices.
They offer numerous free resources including education workshops, one-on-one financial coaching, and self-help support.
5) Money Management InternationaL
They have over 20 years of industry experience helping provide services to people who are struggling with addiction, homelessness, or facing consumer proposals.
They offer free education classes as well as money management courses so individuals can learn how to better manage their finances which could result in less debt down the road.
Is There a Government Debt Relief Program?
Currently, there is not a single federal government debt relief program that our research has been able to uncover.
However, the United States Federal Government does provide some resources that individuals can take advantage of if they’re struggling with high levels of consumer debt.
In addition, state governments often have their own set of programs to make repayment easier but it varies from one state to another so you’ll need to check with your local or county clerk’s office for more information.
In order for someone living in the USA to qualify for Debt Consolidation, Debt Settlement, and Bankruptcy Relief they must first file a petition with the bankruptcy court within their district.
This process will clear most types of unsecured debts which could include personal loans, credit card bills, or medical expenses.
However, it’s important to note that this option will also affect your credit score and future ability to take out a loan or line of credit.
Another program that has been put in place is the Consumer Financial Protection Bureau which was created in 2012 by the Dodd-Frank Wall Street Reform and Consumer Protection Act.
The goal of this legislation is to provide oversight to financial institutions so consumers can have a better understanding of how their money is being managed.
If a dispute ever arises, they’ll work directly with the company involved in hopes of settling the issue as quickly as possible.
Is National Debt Relief a Ripoff?
Based on our research, National Debt Relief is known to have one of the best track records when it comes to negotiating with creditors on behalf of their clients.
They offer a free debt consultation that’s personalized for your needs so you can get an idea of whether they are able to help or not.
If they are, this company has been known to help negotiate to lower your interest rate and monthly payments, settle your debts for less than what you owe or even offer a partial refund.
However, this all depends on the original creditor.
The only real issue here is that if you’re not satisfied with their services, they’ll charge 15% of the settlement amount (which can be up to $500 per creditor) which isn’t that bad if you were looking for some type of debt relief service.
If they are not able to negotiate with your creditors, National Debt Relief will let you know upfront so there aren’t any surprises later on.
Who Qualifies for the Debt Relief Program?
In order to qualify for a debt relief program, you must have a steady source of income and be able to show proof of it.
Debt settlement companies will require at least three months of pay stubs so they can see how much money is coming in on a monthly basis.
They could also ask for your W-2 form if you are employed or your self-employment records if you are self-employed.
The other factors that are taken into consideration are the amount of debt an individual has, how much money is being offered by creditors for repayment and what kind of consumer credit rating they have.
The worse the credit score, the harder it will be to qualify for a debt relief program.
How Does the Debt Settlement Program Work?
The first thing a debt relief company will do is ask you to provide them with all of your financial records so they have a better idea of what you owe.
They’ll then go through each creditor and see which ones are willing to negotiate with their clients.
Once that’s complete, they’ll come up with a plan for effectively settling your debts.
What to Consider When Choosing the Right Debt Relief Company?
When it comes time to choose which debt settlement company you want to go with, there are some key factors that should be taken into consideration such as what services they offer and how much money they cost.
Some companies will provide free debt relief quotes while others might request a small fee of $10 to get started.
The prices will vary depending on the type of program you choose (debt management or debt settlement) and how much work they’ll have to put into your case.
A debt relief company that comes highly recommended in our research is National Debt Relief which only charges 15% of the total debt amount.
They’re known to have some of the best customer services in the industry and they are one of the few companies that can work with federal student loans, tax liens, and lawsuits if you decide the settlement route is the right choice for you.
