Alternatives to Debt Consolidation Loans
The options for getting out of debt are numerous. Unfortunately, too many people are usually only aware of two choices – filing for bankruptcy or debt consolidation loans. American households are no stranger to the struggle. Collectively, they owe $13.9 trillion between student loans, credit cards, mortgages, medical bills, and more.
Debt consolidation is the process of merging all of your outstanding debts into one loan that you pay on. While effective, loan consolidation may not be the solution to everyone’s problem. Furthermore, it should not be viewed as the default solution when you have a lot of outstanding debt. Although you want to get out of debt, as soon as possible, take some time to research the alternatives to debt consolidation loans and make the most informed choice for you and your future.
Debt Settlement Programs
Debt settlement programs are one of the many services a debt relief company like UmbrellaDEBT Relief offers. It may be a viable alternative if your accounts are charged-off or in collections. It may also be a viable alternative if you are about to fall behind because of a legitimate financial hardship. Debt settlement is heavily rooted in negotiation.
Working with professionals, you can take away the stress and anxiety of attempting to bargain with creditors. Instead, professional representatives will reach out and try to negotiate a deal that works for both you and the companies you owe. Typically, consumer’s debts can settle their debt for about half of what they owe with a debt settlement program.
Debt settlement programs involve closing credit cards and actively working to pay off outstanding balances at a reduced amount. Through this arrangement, consumers typically agree to pay the creditor a fixed amount of money (generally a discount on their outstanding debt) either in a lump sum or under a payment plan. Your creditors will be less likely to contact you and demand repayment. But you will have to be diligent and committed to paying off your remaining balance as soon as possible.
Overall, debt settlement programs can be an excellent alternative to debt consolidation loans for those with overwhelming debt who want to lower their outstanding balances and pay them off quickly.
Debt recovery is about much more than repayment. To be successful in the long term, you need the financial skills to avoid falling back into debt. A credit counselor can help you develop a personal financial strategy that includes everything from repaying your current debts to establishing new credit and building a budget.
Credit advisors can help you understand your current financial situation more clearly and devise a strategy that positions you to lead a more independent and stable life going forward. Combined with a debt relief or management program, credit counseling can help you break the cycle of debt once and for all.
Debt Management Programs
Debt management programs work to help you repay debt and help with credit over several years. All your debts are combined into one monthly payment at a fixed payment amount.. You can typically reduce interest rates by choosing a debt management program, which can significantly help lower the burden of repayment for those with high-interest credit card debts.
Similar to debt consolidation, management programs typically do not allow you to establish any new credit or even use existing lines while you are repaying your debt. If you miss a payment, your interest rate discount and consolidation rate may change. You also cannot use debt management programs for student loans or medical debt. This is an option best suited for those who have a lot of outstanding credit card debt from multiple companies that they need to streamline.
Finding a Debt Consolidation Loans Alternative
Carrying a large amount of debt can be overwhelming. But you don’t have to take on the difficult challenge alone. UmbrellaDEBT Relief specializes in helping individuals just like you take stock of your financial situation and lay the path to financial freedom.
By working with an accredited debt relief company such as UmbrellaDEBT Relief, you will have access to valuable financial insight. You will gain the resources necessary to climb out of debt in the fastest and financially smart as possible. Give us a call today to see how we can help.