EIBIK.COM

    Subscribe to Updates

    Get the latest creative news from FooBar about art, design and business.

    What's Hot

    The Ultimate Guide to Wholesale Chinese Take-Out Boxes: Everything You Need to Know

    22nd March 2023

    Albert Bierstadt’s Final Years and Last Paintings

    22nd March 2023

    Breaking Down the Benefits of Heavy Duty Drawer Slides for Industrial Applications

    22nd March 2023
    Facebook Twitter Instagram
    EIBIK.COMEIBIK.COM
    • Home
    • News
      • Finance
      • Current Affairs
    • Travel
    • Biography
      • Writer
      • Athlete
      • Politician
      • Scholar
      • People
    • Sports
      • Game
    • Technology
      • Electric & Electronic
    • List Your Business
    • Contact us
    • Write for us
    EIBIK.COM
    Home » Options and Consequences of Debt Relief

    Options and Consequences of Debt Relief

    John SmithBy John Smith3rd June 2022Updated:19th July 2022 Finance 4 Mins Read
    Options and Consequences of Debt Relief
    Share
    Facebook Twitter LinkedIn Pinterest Email

    You’ve been trying for a while now to handle your credit card debt on your own. You’ve meant well, but now you’re only remitting minimum monthly payments or less if you’re making payments at all.

    You are overwhelmed, and you know you can’t move forward in life — you can’t truly progress — until you deal with your debt.

    The good news is that there are solutions available to you. One is debt relief, also known as debt settlement. But is the strategy right for you? Let’s explore that and others.

    Here are the options and consequences of debt relief.

    Table of Contents

    • Who is a Debt Relief Candidate?
    • What is Debt Settlement?
    • What is a Debt Management Plan?
    • What is Bankruptcy?

    Who is a Debt Relief Candidate?

    You many want to consider debt settlement, debt management or bankruptcy if you can’t see yourself paying off your credit card or other unsecured debt within five years, even if you slash spending drastically.

    You may also need one of those solutions if your debt comes to at least half of your gross income.

    What is Debt Settlement?

    Debt settlement is a financial strategy wherein you hire a firm to negotiate with each of your creditors to see if they would accept less than what you owe to “settle” your obligation. Creditors usually go along because, well, something is better than nothing, which is what they may get if you pursue bankruptcy, which is your other likely option.

    How it works is, rather than pay creditors directly, you deposit cash monthly into an escrow-like account that you control. Once you’ve saved enough, your negotiators will begin negotiations with your credit card issuers. You pay the agency – Freedom Debt Relief has a great credit card debt relief program — nothing until settlements are reached.

    A short-term consequence is damage to your credit, which the process of debt settlement causes. However, once your debts are cleared and you begin rebuilding your credit, your credit scores will rebound. Also, your credit report is likely not great these days anyway.

    What is a Debt Management Plan?

    This solution is a repayment plan in which a credit counselor assists you with determining the amount you can reasonably pay toward your debt, in accordance with your financial goals.

    For a nominal fee, the counselor negotiates with your creditors and, with the funds you provide monthly, makes payments to your creditors until the bills are fully paid. This typically takes between three to five years.

    Note that while participating in a debt management plan, you cannot obtain new credit. You must also close your existing credit cards and allow the credit counseling agency to manage those accounts. Also, enrollment in such a plan will be noted on your credit report.

    What is Bankruptcy?

    Widely considered the remedy of last resort, bankruptcy is a legal process that is overseen by federal bankruptcy courts that was created to help people get rid of all or most of their debt or to help them repay part of what they owe.

    The consequences of bankruptcy are serious and long-term. Depending on the kind of bankruptcy you file – Chapter 7 or 13 — the filing can remain on your credit report for seven to 10 years. During this time, it will be difficult for you to open lines of credit or be approved for loans with reasonable rates.

    You also may have to relinquish some of your possessions including real estate, vehicles, and jewelry.

    In summary, when mulling the options and consequences of debt relief, carefully consider your short- and long-term goals when deciding on the strategy for you. Once you’re back on the right track, be mindful that you must get control of your spending to avoid falling into the same financial situation.

    Keep Reading

    Everything you need to know about making money with Bitcoins

    The best way to start with crypto investing

    List of Countries where Bitcoin is Legal

    Digital yuan – the Chinese digital currency!

    Bitcoin mining: All you need to know

    We are investing in the oil market with crypto!

    Top Posts

    how to make money online & ways to earn money from online

    17th July 2020

    How to Find and Fix Vacuum Leak

    11th September 2020

    Why Big Translation Is The Future of Self-Publishing

    24th October 2021

    Samsung Galaxy M32 5G Review

    28th October 2021
    Don't Miss

    Netaji Subhash Chandra Bose Biography

    Politician 5th February 2020

    Netaji Subhas Chandra Bose(23 January 1897 – 18 August 1945) is a legendary leader of…

    The lure of junk food

    15th November 2021

    Hiring through a recruitment agency: Tips for success

    29th September 2021

    Why Is 2D Drafting the Preferred Choice for Editing Technical Drawings?

    1st February 2023
    Stay In Touch
    • Facebook
    • Twitter
    • LinkedIn

    Subscribe to Updates

    Get the latest creative news from SmartMag about art & design.

    Editors Picks

    What Are Sump Pumps and How Do Sump Pumps Work?

    17th November 2021

    Windows 11 is coming – Here’s everything we know about the new Windows

    5th July 2021

    Slope Unblocked Games | Every Thing You Need To Know About It

    4th February 2022

    5 Things You Need to Know About Gun Cleaning

    1st December 2021
    Latest Posts

    Pro Tips on Stress-Free Traveling: Best Countries, Buying Tickets, House-Hunting

    13th December 2022

    Replacement of Your Window Air Conditioner

    21st December 2021

    Reverse tuck end boxes: Game changer in the packaging world

    11th October 2021
    Advertisement
    © 2023
    • About us
    • Privacy Policy
    • Terms and Conditions

    Type above and press Enter to search. Press Esc to cancel.