If debt has overtaken you, you might want to consider debt relief to get your finances under control. Such programs can render your debt more manageable by lowering rates, altering payment terms, or even canceling some of the obligation. You may want to check out Freedom Debt Relief reviews to see the positive impact the company has had on people like you. Keep reading for the true value of debt relief.
What is Debt Relief?
Debt relief, also known as debt settlement, is basically a process in which a creditor and borrower agree to settle a debt for less than what is owed. While you can settle your debt by yourself, another effective option is to hire a debt relief company such as Freedom Debt Relief.
Debt relief is not a quick fix, however. The long-term solution is meant to help you emerge from debt over a period that could extend to several years. And while your credit rating will take a hit, it will recover at length once you’re out from under your obligations.
How Does Debt Relief Work?
Debt relief involves negotiating with a creditor to see if they’d be willing to resolve your debt for less than what is owed. You’ll first meet with a debt settlement counselor to go over your situation and put together a plan.
Next, the debt relief company contacts your creditors — typically credit card issuers — to negotiate a settlement. Rather than paying the company, you’ll usually be asked to put money into an escrow-like account from which your settlement payment will ultimately be derived.
Once you and your creditors agree upon a settlement amount, you pay that amount all at once or through a payment plan.
In terms of fees, debt settlement companies usually charge between 15-25% of the enrolled debt.
Red Flags to Avoid
Debt relief can be an effective tool but be sure to pick a company that’s accredited and reputable. Unfortunately, there are agencies out there that are more interested in separating you from your money than solving your debt woes. You should contact your local consumer protection agency and state attorney general’s office for any complaints about the debt settlement company in which you are interested.
With that in mind, avoid a company that:
— Tells you it can settle all your debt for a guaranteed percentage reduction
— Charges you before it has settled any of your debts
— Tells you about a “new government program” that can help you. This is typically a scam
— Pledges to get rid of all your debt
— Instructs you to cease communications with your creditors
— Tells you it can make debt collection calls or lawsuits go away
— Guarantees that your unsecured debts can be erased for pennies on the dollar.
The True Value of Debt Relief
While it isn’t for everyone, debt relief offers value by markedly lowering the overall debt, prospectively making your monthly payment more manageable. There are potential drawbacks, such as a damaged credit rating, which means the true value is reliant upon your situation and the debt relief method used. Generally, though, debt relief can be very valuable for those dealing with high-interest debt.
Summary
Mounting debt can not only be a financial nightmare, but it can hurt your quality of life. While debt relief should be a method of last resort, it can lower your monthly payment, reduce your overall debt, and help you avoid bankruptcy. Every situation is different, but that’s the true value of debt relief. Consider letting Freedom Debt Relief handle your case.
