Who qualifies for debt relief?
If you’ve been dealing with calls from collection agencies and creditors multiple times a day, you probably wish there was a way to wipe your debt clean and start over fresh. While there are many different ways you can eliminate your debt, each has benefits and drawbacks to consider. And, the one option that does totally wipe your debt clean comes with serious consequences.
Let’s cover the various options for debt settlement and who can use debt settlement to alleviate their financial stress. We’ll start with an overview of the different types of debt settlement strategies and their effects on your financial life so you can make the best choice for yourself.
Different Types Of Debt Settlement And Their Effects
If you’re struggling to get out of debt and feel like you can’t make any progress, the good news is there are numerous options for alleviating your financial stress.
Some people are coping with major financial hardships that have left them unable to meet their payments each month with no prospects of turning things around soon. In these scenarios, filing for Chapter 7 bankruptcy may be a possibility. Chapter 7 bankruptcy completely wipes debts clean, but there are serious costs—Chapter 7 requires the court system to qualify and has the most severe and long-lasting impact on credit of any debt settlement option.
For people who are still mostly able to pay their bills but can’t seem to make headway on paying down their debt, debt management help from a credit counseling agency might be a good option for debt relief. These programs have a low impact on credit ratings but they provide the least amount of debt reduction.
When credit card interest charges make it next to impossible to pay down the balances, a debt consolidation loan might be a good way to pay off the debt faster. One downside is these loans require relatively good credit to qualify for a rate that makes financial sense, so they are better for people who haven’t fallen behind yet but know they can’t sustain their current financial path.
If a massive hit to credit from bankruptcy doesn’t appeal to you, but you still need a major reduction in your unsecured debts, the next most effective approach is debt settlement. With debt settlement, significant debt relief help is possible to reduce balances in less time. However, there can be negative impacts on your credit, but for a much shorter time than with bankruptcy.
What Is Debt Settlement?
It’s easy to get confused about what exactly debt settlement is. Often, people will say debt relief or debt adjustment when talking about debt settlement. At the most basic level, they mean negotiating debts with creditors directly to drastically reduce debts rather than going through the court system for bankruptcy.
Companies that specialize in providing debt relief program help like Alleviate Financial leverage the talents of professional negotiators to deal with creditors on behalf of their clients. Creditors know that being contacted by debt relief companies means their borrower is in serious trouble and at risk for claiming bankruptcy. In this situation, the creditor is far better off negotiating with the debt relief company to try to still collect some payment instead of none at all.
Alleviate Financial helps its clients get out from under the crushing weight of debt by negotiating with creditors to slash interest, fees, and penalties to drop balances to manageable levels. Contact us today to start getting back on track financially.
Debt Settlement Assistance with Alleviate Financial
Debt settlement help from expert negotiators at Alleviate Financial can drastically reduce your credit card and medical bill debt, enabling you to get debt-free faster and with less money out of your pocket. Our goal is to provide you the most beneficial debt advice so you can get the debt relief you need.
Escaping unsecured debt that’s quickly building every month can feel impossible. The worse credit card accounts get, the faster their balances grow, further limiting your ability to repay the debt. When these debts begin to overwhelm you, turning to experts for help can make all the difference. Alleviate Financial offers an array of solutions for helping you pay down your unsecured debt. Call today to take the first step toward a brighter financial future.
What types of debt can and can’t be settled through debt settlement?
Not all revolving debt is the same. While most revolving debt is unsecured debt, such as credit cards and medical debts, some special cases exist where the revolving debt is secured.
For revolving debt accounts that are unsecured, like credit cards, debt settlement is an option for negotiation.
But if the revolving account is secured, such as with a home equity line of credit, the revolving debt can’t be included in a debt settlement program.
If an asset backs the debt, then the lender can seize the asset to repay the debt if the loan goes into default. The ability to reclaim something of value is why this type of debt is called secured debt—it provides security to the lender in the event the borrower stops paying. An example of this is a car loan or home loan.
This type of debt isn’t eligible for debt settlement programs and must be directly negotiated with the lender if new payment terms need to be arranged. However, lenders for these debts are under no obligation to restructure your debt payments, so bear in mind, you should always pay these debts before anything else.
Most unsecured debt is eligible for debt settlement programs, with the exception of student loans. Also note, student loans can’t be included in a Chapter 7 bankruptcy, either, so that type of debt must be directly negotiated with the lender or reorganized with a new loan.
Unsecured debt doesn’t have any assets for the lender to repossess to repay the debt if the borrower defaults. Because of this, unsecured debt should be the lowest priority if some bills must be paid before others, with secured debt taking the highest priority.
Credit cards and medical bills are the most common unsecured debts included in debt settlement programs. Because of their high interest and penalty charges, these types of debt have the highest likelihood of rapidly rising to the point the borrower can no longer afford the monthly payments or pay down the debt in a reasonable amount of time. When this happens, borrowers are locked into a bad financial situation.
Assistance from professionals like Alleviate Financial can provide debt relief help for people who’ve found themselves in a challenging financial situation. Contact Alleviate Financial today to talk to an expert about debt settlement.
Can Debt Settlement Help You?
When a debt settlement program is the best option for you, Alleviate Financial is here to help you with the process. When you contact us to get debt relief, you’ll get expert negotiators on your side.
You can expect debt settlement to:
- Reduce your unsecured debt balances steadily through a payment program that works with your budget.
- Achieve reductions in fees and interest charges, along with over-the-limit charges. Sometimes our negotiations even result in principal balance reductions.
- Implement a dedicated savings account for leverage in the debt settlement process and use it for paying down the debts after an agreement is reached with creditors.