Debt Relief Services

What Does a Debt Relief Company Do?

Note that debt relief companies are different from lenders that offer debt consolidation loans. While debt relief comes in several different forms, usually, a debt relief company is a for-profit company that will try to negotiate a client’s debt directly with the creditors in exchange for a large fee. When you enter into a debt relief plan, you’ll begin to pay the debt relief agency directly and often stop paying your monthly payments to the lender. 

In exchange, the debt relief company can collect your money and use it to negotiate with the lender to reduce the amount owed. If they successfully negotiate your debt down, you’ll likely have to pay a large fee between 20 and 30% of what you originally owed, plus additional fees for their services. 

Which debt relief services are best for me?

As you explore debt relief services, it’s important to understand the consequences and risks associated with each type of debt relief option. While bankruptcy and debt settlement are for more serious situations, a debt consolidation loan can be extremely helpful in saving you money and improving your financial situation if you qualify. A debt consolidation loan combines multiple loans and lines of credit into one loan, thus equating to one monthly payment. Some lenders even offer direct payment to creditors to make using a debt consolidation loan that much easier. Curious? Explore debt consolidation loan offers today. 

How do you choose a debt relief company?

With so many options available, finding the right debt relief company is important to ensure you successfully get out of debt and improve your finances. As you begin your search, make sure you:

• Confirm they offer debt relief that meets your needs.  Each company will have different parameters on the type of debt they’ll work with, so make sure to confirm yours fits in their offerings.
• Compare fees. As you research debt relief companies, compare the fees they charge and try to find the lowest-cost option.
• Read reviews. Make sure you find a reputable and trusted debt relief company. Some companies can be predatory or charge incredibly high fees, which work to keep you in debt.
  

What are the different types of debt relief?

If you’re considering using a debt relief service, there are a few different options depending on your personal financial situation and what you’re looking to accomplish. The four main types of debt relief include debt management programs, debt consolidation loans, debt settlement, and bankruptcy. 

#1. Debt management programs 

Debt management is a structured repayment plan that doesn’t use a loan to repay the debt. Instead, consumers can work with a nonprofit credit counseling agency to develop a plan that fits your budget and result in repaying the debt faster. 

#2. Debt consolidation loan 

A debt consolidation loan involves paying off all your current debt with a personal loan which you then work to repay on a fixed interest rate with set monthly payments. Using a debt consolidation loan is a great option since it ideally allows borrowers to combine payments into one for a lower interest rate. 

#3. Debt settlement 

A debt settlement involves providing a lump sum to your lender in exchange for part of your debt being forgiven or minimized. While you can attempt to negotiate with the credit company, some debt settlement companies can also offer this as a service — but beware of high fees. 

#4. Bankruptcy

Lastly, bankruptcy is a type of debt relief that involves filing a legal statement in court that states you are not able to repay your debts. Depending on the type of bankruptcy filed, you may be required to liquidate some of your assets like a house, car or other items to repay your debt. However, bankruptcy can have long-term consequences on your financial records, and seeking professional advice is advised before going this route. 

What is the difference between debt settlement and debt consolidation?

While debt settlement and debt consolidation are both ways to reduce your debt, they are different strategies that are best suited for different financial situations. 

Debt settlement is a negotiating strategy to decrease the overall amount you owe directly to the creditor. Most consumers will work with a credit counselor or a debt settlement company to lower the overall amount paid, and in exchange, you’ll pay a lump amount or monthly installments directly to the company. Debt settlement can often be an alternative to bankruptcy but still comes with heavy financial implications to your credit score. 

On the other hand, debt consolidation won’t decrease the amount owed overall but instead consolidates it with a personal loan with one payment and one fixed interest rate. In many cases, debt consolidation can increase your credit score over time since you’ll reduce your credit utilization. 

If you’re looking into debt relief services, debt consolidation is often a better route than debt settlement. But as debt consolidation loan offers can vary, situations and circumstances do too. Consider your needs and goals and explore available options to make an educated decision. 

Picking the right debt relief option for your financial situation is an important decision to get yourself on the right path to debt-free living. Before considering bankruptcy or other options, make sure to explore a debt consolidation loan to help you out of debt. 

Visit Acorn Finance to explore debt consolidation loan offers with no credit impact. Within 60 seconds or less you can find opportunities to consolidate debt and fastrack the way to reducing your financial burden.

Does debt settlement hurt your credit?

In short, yes. That settlement can absolutely hurt your credit score. When an outstanding debt is settled for less than the full amount, it may be reported as “settled” on your credit report. This has the potential to lower your credit score, as well as provoke hesitation in future lenders. This is just one way that debt settlements can impact credit score. The intention though is that by providing short-term relief, you can rebuild your credit and achieve a healthier financial state in the future. 

Can I still use my credit card after debt settlement?

It is possible to use credit cards after debt settlement, but do so with caution. The cycle of debt is a slippery slope, especially for individuals that have trouble managing payments. Additionally, your credit standing after debt settlement may make it difficult to obtain credit cards with reasonable interest rates, which can make payment management even more difficult. On the other hand, responsible credit card use can help rebuild a rocky credit history.

How much can you usually settle a debt for?

The answer to this will be situationally dependent. Factors such as the amount of debt owed, the type of debt, the policies of the creditor, and your personal hardships may come into play, when determining how much you can settle a debt for. 

What is the success rate of debt settlement?

The success rate of that settlement can vary greatly. Ensuring that you are working with a debt settlement provider that has a proven track record of successful negotiation services is imperative to increase your chances of successful debt settlement. The success rate of debt settlements may also be dependent on the severity of financial hardships that are being experienced, as this will typically impact the decision of a creditor. 

How to you apply for debt relief services:

After you have found a successful debt relief services provider, scheduling a consultation will likely be your first step in the application process. During this consultation, you can provide details about your personal finances, the debts that you owe, and any hardships that you are experiencing. 

The provider can then make recommendations as to the best debt relief strategies for your situation. From there, negotiations may begin on your behalf, or a management plan may be set up in order for your journey to financial relief to begin. 

Debt relief can be complex, so informed decisions are crucial in reaching successful debt relief solutions. Working with a reputable debt relief service provider is paramount to your successful debt relief. Debt relief can also be a lengthy process, start working towards relief today. Reclaim financial freedom as you begin your journey toward a future that is debt-free. Start your journey toward consolidating debt for relief at Acorn Finance today. Our network of lending partners can help simplify the process.