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A debt relief loan is a key method for handling debt. Unlike other methods, if done properly a debt relief loan can have instant benefits.
2. PLAN - Debt relief consolidation of repayments to existing creditors. Debt relief management of your ongoing repayments through a program run by a debt relief management company.
3. SETTLEMENT - Debt relief consolidation of payments into a savings trust account to be used in attempts to bargain with creditors.
Debt Relief Options - Techniques
- Snowball relief debt technique
- Avalanche relief debt technique
- Balance Transfer relief debt technique
Debt Relief - is Settlement
Here we discuss debt relief as the service choice widely advertised as "Debt Relief" - that is in fact Settlement.
aka Why is "Debt Relief" frequently used to mean the Settlement service type?
Debt relief, or relief is a powerful word. The term "Debt Relief" is an emotive marketing tactic to attract your business. The term debt relief also detracts from the true characteristics of the settlement service on offer. Debt relief is a risky undertaking that comes with no guarantees of success. Moreover, of the three core service types, debt relief is the one most often connected with dubious and fraudulent operators.
There are both reputable, worthy operators and bad actors in all three service sectors, however, debt relief needs to be approached with maximum caution. Debt relief settlement is also the type of service most commonly seen advertised on TV. Debt relief settlement offers run the gamut from genuine debt relief help through outright scams.
Debt Relief Help and Options
How does debt relief work?
Debt relief help is available for dealing with unsecured debt, relief principally for credit card debts although other types of unsecured debt relief is available for debt that is not secured against collateral. When you first seek debt relief help from a provider organization they should conduct a proper analysis of your financial situation with regards to income, expenditure and debt to see if the option makes sense.
This initial free debt relief help may be provided by a counselor working for the debt relief operator or free debt relief help and analysis could come by means of an independent counselor's help. Debt relief counseling is an important step. In addition to self help, debt relief advice should be sought from a professional debt relief counseling provider in order to facilitate any decision.
If you decide to proceed with a debt relief plan of action then you enroll in a program or debt relief plan with the goal that all your debt is paid off or discharged within a certain timeframe (2 years on average). The debt relief plan is a savings plan designed to accumulate sufficient funds with which to entice a creditor to settle for less money through your payment of an agreed lump sum.
The rationale behind debt relief is that if you stop paying your creditors and then approach them later, at the right time with a lump sum offer, they will be inclined to agree to accept this lump sum, and in so doing relieve you of your legal obligation for the debt. The goal of debt relief is to get creditors to accept a sum of money that is less than the amount that you would otherwise have to pay hence relief of debt.
The "debt relief" concept comes through the notion that you gain relief from a large part of the debt burden. You are thus relieved of your full obligation to pay back 100% of the debt. Debt relief hopes to achieve a substantial "saving" by lowering your principal balance liability by perhaps 50%, so you pay back much less.
What many people do not realize is that debt relief requires ongoing payments that may be as much as you have recently managed to pay to the creditors directly yourself. Debt relief calls for routine deposits into a managed account. You need to build up monies over time for the purpose of debt relief negotiation. Only when you have managed to save enough money does any attempt at debt relief negotiation begin. In the meantime your chosen provider collects their fee and your debt continues to incur interest and penalties.
Debt Relief Risk and Reward
The primary reason or benefit of debt relief is the potential for achieving a significant reduction in your overall debt liability. Successful debt relief means that your creditors accept less to discharge the debt. During the course of the debt relief scheme you may also have lower monthly outgoings, as you switch from paying your creditors to making a monthly deposit into your debt relief account.
The downsides of debt relief or risks associated are significant. Debt relief as an option could end up costing you a lot more money than bankruptcy. Debt relief is often evaluated alongside bankruptcy. Debt relief is often weighed up against bankruptcy debt relief under chapter 7.
You may have a monthly debt relief payment that is just as high as payments that you are currently making. There are bad credit debt relief implications. Debt relief requires that you stop paying creditors with damaging affect on your credit and accruing interest on your debt. Debt relief has no guarantee of success. Your creditors may sue you or be unwilling to accept any reduced balance.
Some debt relief organizations charge excessive fees that you will not recover in the event of failure or drop out. If you drop out of a debt relief scheme you end up worse, off owing more money. One of the leading causes of debt relief failure is the customers inability to keep up with the regular debt relief payments necessary to build up the debt relief negotiation fund.
Choosing to get debt relief can be risky in itself, as you must be mindful to get debt relief help only from a reputable provider. When you look for online debt relief online be careful with the information that you disclose initially. If some debt relief online operators seem dubious avoid them.
You may explore other debt relief consolidation options here. We take a detailed look at all three core debt relief consolidation options on this website. These are personal debt relief options not business debt relief. For business debt relief see our main consolidation article. In the long run, relief from debt typically requires a new budget discipline. Long-term relief from debt requires personal financial commitment.
Best Debt Relief
The best debt relief organization is one that provides an honest and upfront assessment of the likelihood of relieving your debt burden in an acceptable timeframe. Debt relief assistance may come from member organizations of the AFCC. Need fast debt relief? Here you may find fast debt relief assistance from companies who adhere to strict rules of conduct. Your best debt relief outcome that you could hope for is a significant reduction in the amount paid off as a means to avoid bankruptcy. Debt relief options should not be chosen lightly. All debt relief options require proper research into potential operators. Don't forget that debt relief and settlement are the same service type. Further debt relief help is therefore available here and in our 'settlement' articles. Debt relief help might also be sought from a qualified attorney. Payday loan debt relief may be unavailable through the settlement service approach. In general, payday loan debt relief must be sought through the loan method identified above. Payday loans debt relief might be attempted yourself but you should involve an attorney.