Do Debt Relief Programs Really Work?
Debt in America is an overwhelming problem for many as consumer debt has eclipsed more than $13 trillion. Between irresponsible spending to unforeseen circumstances, a time comes when the debt you have accumulated needs to be tackled head-on. Debt relief programs may be one possible solution to regain your financial freedom.
The Debt Spiral
Student loans are hard to manage when you’re barely making enough to pay your bills. Home and auto loans may even fall to the wayside as you struggle to keep up with more pressing needs. Throw in medical bills, automobile or home repairs, or other emergency expenses and one can easily become consumed by debt without ever intending to overspend.
As debt accumulates, a tipping point is reached sometimes referred to as the debt spiral. This occurs when the interest charged against your debt prohibits you from paying anything more than the minimum monthly payment. Once this point has been reached, the time necessary to become debt-free will take more than a decade.
It is at this point many individuals and families begin looking for solutions. Regardless of how you got here, one thing is certain – you need a way out. A debt relief program from a debt professional is one option to consider before considering other alternatives, such as filing for bankruptcy.
Exploring Debt Relief Options
Debt relief can come in many forms. You may consider consolidation, a process that combines all your debt into one large payment. On the surface, debt consolidation may be appealing as you reduce the number of monthly payments down to one. However, this method does nothing to reduce your actual debt load. Further, payment obligations may be more restrictive than with your current creditors. This means missing a payment can result in much more severe fees and interest rate penalties.
Debt settlement is a different approach. Instead of switching one creditor for another, debt settlement involves negotiating down the amount of debt you actually owe. Using consumer laws available in your state, professional debt counselors and negotiators use proven methods to reduce your debt. Creditors, such as credit card companies, know debt settlement will allow them to recover more than if bankruptcy were filed. Debt settlement is often the most affordable debt relief option.
Is Debt Relief Better Than Bankruptcy?
Bankruptcy may seem like your only option, but it is not always the best solution. In 2019, more than 773,000 Americans filed for bankruptcy.
You should always speak to a bankruptcy attorney about these options but here are some generalized thoughts. There are generally two types of bankruptcy an individual can usually file. Chapter 7 bankruptcy usually ends up with the consumer not paying back much of anything to the creditors in the bankruptcy filing. Chapter 13 bankruptcy will usually entail having a portion of the debts paid back over a certain amount of time.
Bankruptcy is a major decision. A decision that will have financial ramifications for years to come and one that should not be made of desperation. While it’s understandable to see bankruptcy as a solution to your financial situation, you should consider all of your options.
You can work with a professional debt relief company to explore your debt relief options. Ultimately, you want to make a choice that promotes a healthy financial future, not just immediate relief.
How do Debt Relief Programs help?
Although debt might make you feel alone, the average household carries an average credit card balance of $8,500. UmbrellaDEBT Relief specializes in helping people break out of the debt cycle and reclaim financial freedom. When you work with an accredited debt relief company, you gain valuable access to professional insight and resources that can get you out of debt the fastest.
Constructing a personalized debt relief program is just part of the package. Financial counseling services help you develop better money management skills and avoid falling into debt again. If you or someone you love is struggling with debt and seeking ways to become debt-free, give us a call or contact us online to learn more about the options available.