Exploring Three Common Debt Relief Solutions
If you feel like you’re being crushed by a mountain of debt, you’re far from alone. In fact, about 80 percent of Americans are in the same situation. Right now, national consumer debt comes to a collective total of more than $14 trillion, with the average American being more than $90,000 in the red. Most would love to resolve those financial woes, but they don’t know where to start. After all, they have to continue covering all their other monthly expenses while slowly chipping away at their additional debts. Companies like National Debt Relief are here to help, though.
Common Debt Relief Solutions
For those who want to get out from under mounting debt, several solutions are available. Some are a bit more complex than others, and certain options take more time and patience than their alternatives. Not all of them are right for all situations. Take a look at three of the most common solutions to help you decide if they fit your needs and expectations.
Debt consolidation is one of the most popular debt relief alternatives for those who can feasibly cover their financial obligations. It involves taking out a loan to repay other debts. Instead of paying individual monthly payments on each of your debts, you’d use the loan to pay off all of them and simply make single monthly payments on the loan. If carried out correctly, debt consolidation can save people money each month on payments while also saving quite a bit in interest over the long term.
Debt consolidation isn’t the answer for everyone, as finding just the right loan to achieve the ultimate goal can be difficult. For some, debt management is the more suitable solution. This means taking a look at all your unsecured debt and finding a way to repay it during a specified amount of time. It often entails a combination of consolidation and other methods. You’d essentially send money to a credit counselor each month, and he or she would allot specific amounts to your creditors.
While debt management and consolidation require debtors to eventually pay off the amounts they owe to various creditors, debt settlement works a bit differently. With this solution, you or a representative would negotiate with creditors to reduce the amount you owe them. From there, you’d pay a lump sum that would be divided up accordingly. You’d pay much less than originally owed, and your debts would be considered paid in full as long as your creditors agreed to such an arrangement.
Finding the Right Option
Debt settlement is generally the least costly of these options because some of the interest and late fees owed to creditors are typically forgiven. That said, this solution can have more negative credit repercussions, and not all creditors are willing to settle. Debt consolidation is certainly beneficial, but many people are lured into a false sense of security with this option because loan terms and interest rates can be misleading. Debt management isn’t so harsh on people’s credit scores, though not everyone can afford to follow this alternative. Give these debt relief solutions some consideration, and don’t be afraid to reach out for help deciding which one might best suit your circumstances.