Though you tried mightily, you couldn’t keep up with your credit card debt. In fact, you fell in even deeper. Well, you do have an option short of bankruptcy and it’s called debt relief. While no financial strategy is perfect, debt relief has helped scores of people just like you.
Here’s the truth about credit card debt relief.
What is Debt Relief?
Also called debt settlement, debt relief involves enlisting a company to see whether your creditors – mostly credit card companies –will let you pay less than the total amount you owe to “settle” your debts once and for all. And why would they do this? Well, they can see what shape you’re in, and know that if you file bankruptcy, they probably will get nothing.
How Does Debt Relief Work?
After an initial consultation with a company such as Freedom Debt Relief, you’ll have a plan formulated just for you. You’ll be asked to start making monthly deposits into a savings-type account that you control. When you’ve saved enough – the amount will depend on your debt load and your earnings – your company’s negotiators will go to your creditors on your behalf. Once each settlement is reached and agreed upon by you, the funds will come out of your account.
Won’t Debt Relief Hurt My Credit?
The process of debt relief calls for each of your creditors to receive a one-time payment in full to satisfy your obligations. Because you’re paying your creditors indirectly – from your account – and only after a settlement is reached, your credit will sustain a temporary downturn. Once all your settlements are reached, and you build your credit back up, your scores will rebound and then some.
How Long Does Debt Relief Take?
Credit card debt relief – which is basically what debt settlement is — takes anywhere between two and four years, which may seem like a long time, but not compared with the time it would take to try to pay off your debts by yourself. Now that would take years, if not decades. Also, your first settlement likely will come within a few months.
How Much Does Debt Relief Cost?
It depends on the company, but you can figure on between 15% and 25% of your enrolled debt. But you know how certain things can be “priceless”? That would be your newfound peace of mind.
Aren’t There a Lot of Scammers in Debt Relief?
Not a lot – unless one nabs YOU, of course. The fact is that most debt relief agencies are on the up and up. However, it’s also true that there are some bad actors out there who are more interested in separating you from your cash than getting you back on the right financial track.
What you want is a reputable, credible company with a proven track record. You also want accreditation, so find a company that is a member of the American Fair Credit Council and the International Association of Professional Debt Arbitrators.
What you don’t want is a company that asks for fees upfront – before they’ve settled a single debt. That’s against the law, by the way. Make sure the company is transparent about its fee structure and doesn’t pressure you to sign up. Sometimes companies over-promise ormake guarantees, which are other red flags. While debt relief is a popular and overall wise strategy, negotiations, by their very nature, are unpredictable.
Now that you know the truth about credit card debt relief, you can move with confidence, if the approach suits you. Just make sure you pick a credible, established company to help you, and you’ll be back on track in no time.
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