A Quick Guide on Debt Relief Programs

There’s a mountain of debt in front of you and all you have in your mind is consolidating debts, and you don’t know what to do anymore. You’ve tried asking help from family and friends, but of course, you can’t depend on them forever and for their priority to consolidating debts. The pressure to pay off these debts is getting to you. And it doesn’t help that debt collectors are always chasing after you.

Don’t worry. Debts problems are resolvable. Here are four types of debt relief programs that you can use to lighten up your load.

Debt consolidation

Debt consolidation refers to the process of merging multiple unsecured loans into one single monthly payment. This can be used for consolidating smaller loads, bills, payday loans and credit card balances.

Benefits                                                

  • Simplifies payments and financial planning
  • Reduces the interest rate
  • Allows you to pay the debt much faster

As you can see, debt consolidation makes it easier to track and stay on top of monthly payments. Instead of making several payments in a month, you only need to make one. You can also save money with the lower interest rate. If you have good credit rating, you can get an interest rate as low as 5.9 percent.

Balance transfer

In this type of debt relief program, you can transfer the balances of high interest rate credit cards to those with lower interest rates. To do this effectively, compute the average interest rate on all your credit cards so you can see if you can get something lower with a new credit card. If you’re eligible for a 0 percent balance transfer card, then you can have up to 18 months free of interest. This will enable you to pay off your balance more quickly.

Debt management plan

As the term implies, this is a method for managing debts. This is something that you can do on your own, but it would be wiser to enlist in consumer credit counseling. A financial counselor will work on your case to help devise a plan for paying off your debts more efficiently. He or she will also negotiate to get lower interest rates for your debts, and waive off any penalty fees that you might have incurred.

Debt settlement

In debt settlement, you negotiate with the lenders and offer them to pay lump sum of what you owe them. But you’ll negotiate for a lower amount. This helps you get rid of the debt fast. But the drawback is finding the money to pay for this amount. You can get another loan but this will only bury you deeper in debt. What you can do is to work three times harder to earn a lot more money, and then save enough to pay the debt in full.

Getting rid of debt can be taxing and stressful. But once you get this off your back, you’ll again be able to live happily and peacefully.