Does it become hard for you to earn even bread and butter?
You don’t have any saving by the end of every month, and the good news is that you have consumed maximum allowed limits of all of your credit cards.
Moreover, you are totally in debt from head to toe. Don’t need to freak out as you are not alone on the planet and this recession is not just on you.
There are millions of people only in the United States of America who is facing the same kind of issue in their lives, and for this reason, there exist the debt relief programs.
They Types of Debt Relief Programs
There are five commonly known types of debt relief programs which are listed here below:
- Consolidation Loan
- Debt Management Plan
- Balance Transfer
- Debt Settlement or Negotiation
- Bankruptcy
You have the option to choose one of these debt relief programs to suit and fit your needs and circumstances. Let’s discuss a little more about each of these debt relief programs.
- Consolidation Loan
You might have lots of small debts, or you may have more than one credit cards, and all the cards are maxed out because always had short of resources.
If this is the situation, then there comes a handy debt relief program called debt consolidation or consolidation loan.
A consolidation loan is simply lumping up the small loans and paying them off with a bigger loan. For example, if you have three loans of $500, $1200 and $1300 then you remain worried whole month as every week you have to pay the installment of each loan then you can simply get a loan of $2000 to pay all these three debts.
Now you will have to worry about only one loan, and good thing will be that you will be paying a lower interest as the amount is larger.
- Debt Management Plan
If you are unable to manage your debts and you are getting calls every day and night from your creditors, then you can get the services of consumer credit counseling agency.
A consumer credit counseling agency offers you a plan based on your inflows of cash and then it contacts your creditors and shows them that plan so they may agree to that plan.
Once they agree to the plan, they ask you to pay a fixed amount each month to the agency and manage your debts itself.
A Debt Management plan is somewhat like the Consolidation loan.
The only difference is that you involve an agency who deals with your creditors on your behalf and you simply pay a fixed amount every month to the agency managing your debts.
- Balance Transfer
A balance transfer is another form of debt consolidation, but in this type of debt relief program or consolidation, there involve only the credit cards.
If you had more than one credit cards in your wallet and you maxed out all, and now you’re worried about paying back all the dues then you can apply for 0% balance transfer card or at least for a card which offers lower interest rates.
Hence you will be able to make lower payments and management will be easier for you.
- Debt Settlement
It’s the rare form of debt relief program.
You contact all the creditors personally and ask them to accept an amount as settlement of whole debt. This amount is not the actual amount of debt but a lesser amount.
Most of the times the creditor agrees at this because something is better than nothing.
- Bankruptcy
The other name of Bankruptcy is Blacklisting. It is no doubt one of the most popular types of debt relief programs, but this option shouldn’t be chosen.
It keeps you blacklisted in all the financing institutions for ten years.
But the only good thing about bankruptcy is that it discharges you from all of your unsecured debts.
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