A Few Frequently Asked Questions About Debt Relief
By Virgis Eva
These days, getting a loan is easy. You do not have to rely on the traditional banks anymore as there are alternative sources to avail loans instantly and that too even if you have a low credit. With the alternative online lending sources you can now get your loan amount wired in just a matter of a day or two!
However, people taking out more and more loans do not mean that the money lending industry is doing exceptional business. This is because a majority of the borrowers default in their payments and ideally end up seeking debt relief from different sources. If you go through the reviews you will see that a lot of people in the past couple of years after the Great Recession have opted for different forms of debt relief such as:
- Debt settlement
- Debt consolidation
- Balance transfer and
- A significant number has even foiled for either Chapter 13 or Chapter 7 bankruptcy.
These debt relief options are designed to protect the consumer rights as well as to provide the borrowers some respite from the debt burden and stress. If you are also facing such a situation and have started falling behind your debt repayment schedule of late, choosing a suitable debt relief option is the right and most prudent move to make.
Working with a reliable partner
Now the question is whether or not you should go ahead alone in this journey or have a reliable and trustworthy credit counseling agency as a partner by your side. Experts say that it is always better to work with such an agency due to several good reasons such as:
- Being experts in this field they will know which is the best debt relief option for you to choose
- They will consider your current financial situation and debts so as to determine the most productive plan
- These agencies will also work with your creditors to come up with a better repayment plan to reduce the debt burden on you.
In short, they will take away all your worries and stress regarding your debt and make your journey much easier and more achievable.
Do they really work?
Contemplating on different debt relief options, there will be several other questions that may arise in your mind.
One such significant question is whether or not these programs work. The answer to this is very short and simple. Yes, it does. However, you will need to choose the right debt relief option to make it work. For this you will need to do some homework before you choose one option for you. This will enable you to know a lot of things such as:
- The required amount of time it will take to achieve your goal
- The cost involved in it and
- Not choose an option that will make things worse.
Remember, a small mistake in your choice will not only make your life hell but will make your financial health from bad to worse.
Affecting your credit
Now you may ask whether or not, and if so how debt relief affects credit. Well, the effect, its type and magnitude will primarily depend on the type of debt relief program you eventually choose.
- If you go for a debt consolidation loan it will have a positive effect on your credit just as a balance transfer option would. This is because in these two options you do not reduce the total outstanding balance amount but simple change its form and terms of repayments.
- On the other hand, if you choose a debt management plan, it can damage your credit or even help it, depending on the circumstances in which the DMP is reported to the three credit bureaus.
However, your credit will have the worst effect when you choose a debt settlement or bankruptcy debt relief option. This is because you actually reduce the amount you owe to your creditor in a debt settlement program and not pay anything to them in case you choose to file Chapter 13 bankruptcy. The only difference between these two options is that debt settlement will not damage your credit as much as a bankruptcy option would for ten long years.
Choosing the best option
With so many debt relief companies available, the next question that may come in your mind is which the best one to choose is. The best way is to go through the Pennsylvania debt relief reviews for that matter and analyze each of them based on specific parameters such as:
- Their number of years in business
- The types of service provided
- The cost factor and most importantly
- The level of satisfaction of the previous customers.
Though ranking is a very important parameter, it should not be the only one as you should also check their license and registration along with an accreditation from the Better Business Bureau.
Reasons to choose
There are lots of reasons you should choose a legit debt relief company. They will be able to deal effectively and proficiently with your overwhelming debts if you are behind on the bills. They will make sure that:
- You not get caught up in an unnecessary amount of time
- You are not charged high for the services and
- You get the most dynamic and suitable solution.
A proper and thorough research will also enable you to know the right place to go for a debt relief. These places include:
- The traditional banks
- Different savings institutions for loans
- Debt settlement companies
- Credit card issuers
- Consumer credit counseling agencies and others.
However, which of these will be the most suitable for you will largely depend on your needs and your power to choose the best from the rest. The best way is to go with your gut feeling.
Lastly, the cost factor of hiring such a service may also do rounds in your mind. Banks will charge 5.75% to 12%, non-profit credit counseling agencies will charge a monthly fee from $0 to $50, debt settlement companies from 15% to 25% and bankruptcies will cost less than $500.