If you’re reading this because you need debt relief options, you should be congratulated. Too many supposedly “helpful” experts, friends, or relatives may try to shame you for needing debt relief. While it’s true you must address what got you into debt in the first place, what’s really important is that you are now working to pay off debt.
Sometimes you find yourself in debt due to bad choices. Maybe you shopped too much or bought a car or took a vacation you couldn’t afford. But this isn’t the only way consumers find themselves in debt!
What Puts Consumers in Debt?
One big reason for unwieldy debt is medical bills. According to a Kaiser Family Foundation report, 1 in 5 Americans has trouble paying their medical bills — and these are the people with health insurance!
Another reason for crushing debt is student loans. A Pew Research Center study says that student loan debt is now over $1 trillion. As the costs of a college education continue to spiral out of control, younger people are having to pay more and more for college. In fact, 4 in 10 adults under age 30 have some kind of student loan debt.
Read more: The Best Debt Payoff App for 2018
Debt Relief Options
So it doesn’t matter why you have debt; it only matters that you’re seeking debt relief. What are your debt relief options?
1. Look Online
All the above options can be done from your side without searching for a third party for help. But sometimes, your debt can become too big to handle on your own and adjusting your habits or proposing settlement might not work for you. At times like this, looking for a professional help that can come up with the best debt management plan can do wonders.
Searching for debt relief companies can be a daunting task because every debt relief option providing company has a different goal towards your debt. Some will provide you counseling or consolidation while others can help you with debt settlement or bankruptcy.
If you are looking for debt relief options via companies then, we have handpicked some of the best debt relief companies to help you start your journey towards financial freedom.
i) Freedom Debt Relief
Freedom Debt Relief is a debt settlement service that negotiates with your creditors to reduce the amount of unsecured debt you owe. With over $9 billion debt resolved since 2002, Freedom Debt Relief is the largest debt relief company in the U.S. They offer a free consultation where they will discuss your options and how their solution could help you get out of debt faster and for less.
If you qualify for their program, they will work with you to develop a personalized strategy to resolve your debt and you will begin funding your dedicated account that will be used to pay the settlements they negotiate. Once you have saved enough money, they will start negotiating with your creditors on your behalf to reduce how much you owe.
The minimum debt requirement is $7500 which can be resolved in as little as 24-48 months.
Minimum debt required: $7,500
Typical turnaround: 24-48 months
Service Fees: 15%-25% of total debt.
While you could also choose to do the negotiation yourself, Freedom Debt Relief has over 15 years of experience negotiating with creditors. Their proven debt relief program has helped thousands of Americans get out of debt for significantly less than they owed. Without filing for bankruptcy or a taking out a loan. Fill out their simple online form to find out how much you could save on your debt.
American Debt Ender is a debt counseling service which provides free counseling for debt relief option and offers various programs like debt management and credit repair program.
It provides free credit counseling whether it is for debt consolidation, settlement, bankruptcy or student loan. With no hidden fees, American debt enders’ service fees depend upon the specific program you choose.
One of the unique thing about ADE is the availability of different resources like the free credit report, bankruptcy lesson or articles on personal finance.
Typical turnaround: Up to 60 months
Service Fees: Varies by specific program
To settle the debt or manage it, you are required to have a minimum debt of $5000. American Debt Enders is very effective not just because they provide free counseling but because they offer programs for nearly any unsecured debt, keeping in mind that every person has a different debt.
iii) National Debt Relief
National Debt relief or NDR is a debt negotiation company whose main service is to negotiate with the creditors to forgive your debt balance and in return, they will pay a lump sum amount.
If you are unable to pay your debt in the allotted window, choosing debt relief option like this, might work the best for you. Whether it is your credit card debt, student loan, personal loan, business loan, or even your medical bills, NDR can help you become debt free.
The best part about NDR is their transparency, with no hidden fees or consultation fees the only fees that they charge is their service fees which vary differently throughout the states.
Minimum debt required: $7,500
Typical turnaround: 24-48 months
Service Fees: 15-25% of total debt.
NDR won’t get paid unless your debt has been reduced. With its low debt amount and easy approach, NDR is one of the best debt relief options for you without having to face bankruptcy.
2. Adjust your spending habits
This is the easiest method, but it is, sadly, not possible for many seeking debt relief. Regardless, it should be your first step in your journey to becoming debt-free. Add up all your debts, record how much your monthly payments are and compare this to your income. Is it close? Could you bridge the gap by cutting corners, getting a roommate or selling your car? How about getting a second job for six months? Could debt consolidation help?
Consider seeing a credit counselor about this. Transferring all your debt to one loan or a single credit card will likely lower your interest payments. Be careful with this though — many cards will offer you a ridiculously low introductory rate, only to follow it up a few months later with a rate so high it practically qualifies as usury. If you can swing this way of getting out of debt, it’s the easiest, because it won’t affect your credit history the way late payments, defaults, and bankruptcy will.
3. Propose a settlement
This works more often with medical bills. Since these can be discharged by filing for bankruptcy, some medical facilities are more willing to settle for a lesser amount. According to the Consumer Financial Protection Bureau, you should get a copy of your bill in writing before proposing any settlement. A phone call from a creditor isn’t enough. And even when you have the paper copy, if you make an offer and it is accepted, keep a record of this to prove your agreement is real. The CFPB advises checking on the statute of limitations in your state as well before proposing a settlement.
In most states, you can only be sued for medical debts for three to six years after incurring them. However, making a payment can reset the clock, so you might want to check with an attorney. It is difficult — but not impossible — to settle a student loan debt, because these are not eligible for dismissal in bankruptcy. According to the Student Loan Borrower Assistance Project — a program of the National Consumer Law Center — you may be able to get collection costs waived or even some of the principal. But it will likely never be forgiven entirely.
Credit card companies will sometimes accept a settlement, but according to National Debt Relief, a debt settlement company, you must be at least 90 days late on your payments. When you propose a settlement, the company will likely check your payment history to see if you have been paying other debts, and if you have, they will be less likely to accept your offer.
4. Declare bankruptcy
This should be your last choice because of the negative effects of this move will follow you for many years. The good part about filing for bankruptcy is that you don’t have to pay the bills that have been haunting you. But part of the process of filing Chapter 7 bankruptcy is liquidating your assets to pay a portion of your debt — your home, your cars, jewelry, etc. So you’re free and clear, but you’re starting from zero.
Filing for Chapter 13 allows you to keep some of your property, but you must pay on your debts for three to five years, and the court looks extremely carefully at how much you are spending and on what. Filing for bankruptcy stays on your credit report for 10 years. While this is unpleasant, it doesn’t necessarily mean you can’t get a mortgage or a credit card after you file.
In fact, some companies court consumers who have filed for bankruptcy, knowing that now that their debts have been discharged, they will have some money to spend. Be careful though — if you got into debt due to poor money management, this could put you right back in the same spot you were in before. And you can’t file for Chapter 7 again for eight years (two years for Chapter 13).
Trying some of these options for paying off debt can help you get a handle on your finances, stop your phone from ringing as much and allow you to sleep at night again. As you continue to practice better money management you will be able to build good credit and even find ways to make saving money fun.