Debt Relief Help: Your Options and Qualifications for Debt Relief

When you’re facing multiple calls and letters every day from creditors and collection agencies, alleviating your financial stress is something that’s always on your mind. There are various ways to get debt relief help, but what are the different qualifications required for each of them?

In this post, we will cover the numerous options and qualifications for debt relief and the available types of debt relief services for folks who’ve fallen behind on their payments to the point they can’t get ahead no matter how hard they try. Let’s begin with an overview of debt relief and how it works so, you can understand what options are available to you.

Is Debt Relief A Good Option For Me?

Whether or not debt relief is a good option depends on your financial situation and the type of debt help you’re seeking. If your circumstances are so dire that you can’t pay anything at all on your debts, let alone build up funds for a lump-sum payment, a debt settlement might not be the best option for you. Typically, even the most generous debt settlements still require paying 25% of the total debt owed.

Common Options for Debt Relief

  • Creating a strict budget to be able to pay more than your monthly payments each month
  • A debt consolidation loan with one payment every month at a lower interest rate
  • Assistance with debt management from a credit counseling agency
  • Debt Settlement can considerably reduce balances, but with more impact on credit
  • Bankruptcy offers the most debt relief, but it has the worst and longest effect on credit

How Does A Debt Relief Program Affect Your Credit?

Often, the reduction in credit score from agreeing to and paying a debt settlement in full is only about half as much as if the bankruptcy route is chosen. Because the drop in score is so much less, it’s easier and faster to recover from debt settlement than bankruptcy when it comes to credit rating.

How Do You Qualify For Debt Relief?

Debt relief companies sometimes require qualifying first by making a monthly payment into a settlement fund that will later be used to pay your creditors after negotiations are complete. This payment is usually lower each month than the current combined amount of debt payments.

Are Debts Forgiven After Seven Years?

Most debts fall off of credit reports after seven years, but bankruptcies can remain on credit reports for up to ten years. Also, keep in mind that just because a debt isn’t on your credit report doesn’t mean it’s technically been forgiven by the creditor––it still exists. The good news is, positive records on your credit report remain indefinitely, so it is possible to eventually have a clean credit report even if things feel too hard to overcome right now.

Can You Go To Jail For Unpaid Credit Card Debt?

Luckily, the United States doesn’t do debtor prisons, so you won’t ever be sent to jail just for not paying your credit card debts. If you can’t make your credit card payments, the creditors will eventually send the debt to a debt collector, and if left unpaid long enough, the debt will be written off and removed from your credit report. But this takes years, so it’s not a good course of action for anyone trying to re-establish their credit anytime soon.

What Happens If You Ignore Debt Collectors? 

One of the biggest risks of ignoring debt collectors is that they can eventually take legal action against you through the court system. When debt collectors are awarded a judgment against you for unpaid debts, they can sometimes be granted a wage garnishment, which can significantly reduce your paycheck until the debt is paid in full. They may also be able to levy your bank accounts, so it’s unwise to simply ignore debt collectors when they threaten legal action.

How Can I Legally Stop Paying My Credit Cards? 

While you can’t be thrown in jail for not paying your credit card bills, there are still legal ramifications for not paying your credit card bills. Debt collectors and credit card companies may still be able to sue you and win a wage garnishment or bank levy. If you stop making payments on your credit card bills, you will also be charged late fees and penalty interest rates, along with taking a major hit on your credit score.

Will Credit Card Companies Forgive Debt?

Credit card companies rarely forgive credit card balances, but a settlement might be possible with them if you haven’t paid on the debt in a while and it still hasn’t been written off or sent to a collection agency. Even then, it’s unlikely the credit card company will wipe the entire debt clean––you’ll still need to pay something to have the debt marked as paid. Credit card debt relief companies like Alleviate Financial can assist you in getting the best settlement possible.

Can I Negotiate Credit Card Debt Myself?

Negotiating directly with credit card companies is possible. Sometimes you can get them to agree to drop some of your late fees and interest charges if you’re struggling to get back on track financially. Expert financial debt help is possible through agencies like Alleviate Financial who negotiate on your behalf with creditors to settle your debts.

How Do I Qualify For A Debt Consolidation Loan?

One of the most significant downsides of debt consolidation loans is that they require credit qualification, which isn’t that helpful for people who are already struggling with their credit scores because of snowballing credit card debts. The lower your score, the higher the interest, which may not be worth it in the long run. In general, you’ll need at least a mid-600’s credit score to qualify.

What Are The Disadvantages Of A Debt Management Plan?

Debt management plans aren’t perfect solutions. Some of the disadvantages of this form of debt relief help include:

  • You must fully repay your debts rather than have them written off
  • Creditors are under no obligation to participate and may instead ask for immediate payment in full
  • Secured debt such as home loans and car loans can’t be included in debt management plans, and not paying them may result in foreclosure or repossession of the debt securing collateral

If you’re unsure what type of debt relief is the best option for you, Alleviate Financial has debt relief experts ready and waiting to help you understand what kind of debt assistance you may qualify for. Contact one of our debt specialists today and alleviate your stress by taking steps to get your financial life back on track.