Are Debt Relief Programs a Good Idea?
The Short Answer: Yes
Yes, debt relief programs can help you, but there are things you want to think about. Everyone's personal situation is different. Some are going to do better with a debt relief option, some aren't. For the most part, though, you're actually going to experience some relief. Following we'll cover what debt relief is, and the sort of situation which would make these programs a good idea for your particular situation.
How Debt Relief Works
With debt relief, the amount you owe is reduced significantly; you'll then pay it back in multiple payments. For the most part, the loans debt relief programs will provide assistance for are those of the "unsecured" variety. If you've got collateral involved in your debt, that's going to change your eligibility for debt relief.
Debt relief may impact credit, but that's going to depend on the sort of debt relief you pursue. If you're going with a refinancing and consolidation solution, that's going to have a different impact to your personal credit than some sort of debt settlement. Experian provides some information on the varying ways debt relief programs can affect your credit.
Here's what you should consider: you can always get better credit faster if you don't have debt. So while a debt relief program may have some impact on personal credit, it will make it so you can build true equity, and steadily build credit back to where it should be.
It doesn't always take long; it will depend on your situation. Also, it's notable that negative credit issues will disappear in seven years provided you don't make them worse. Basically, if you make a late payment, it takes seven years for you to see that fall off your credit report.
But Do Debt Relief Programs Actually Help You Get Out Of Debt?
They certainly will, if done correctly. For most debt relief programs, you have to owe a certain amount before they're going to help you. According to Freedom Debt Relief, that minimum amount is $7,500. Through this group specifically, you can secure debt relief solutions for personal loans, medical bills, credit card debt, and unsecured debt. This particular group doesn't provide options for mortgages, auto loans, or federal student loans. There are mortgage debt relief options, there are auto loan debt relief options, and you can get your federal student loans reduced.
Generally you can expect a two to four year repayment period when you go through debt relief agencies. It will depend on the sort of capital you can raise, and how much you can pay back in a timely manner. There's also the consolidation option. Debt relief, or debt settlement, reduces how much you owe as a means of helping you manage your debt, and not be on the hook forever. Debt consolidation basically combines all of your debts together into one payment, and the consolidation group buys that debt; then you pay them back at diminished interest. You don't lose out on debt, but you don't have to pay as much in terms of interest, meaning in the long run, you do pay less. Consolidation isn't debt relief, but it may be an option to factor in.
Should You Consider Debt Relief?
Well, debt relief can definitely reduce what you owe. It may have a slight impact on your credit, but you are able to get out from under the scourge of debt more quickly, and that allows you to establish stronger credit going forward. In short, the benefits outweigh the detriments, so yes, debt relief can help, and it's certainly an option to consider.