Are you overwhelmed with credit card debt and other types of unsecured debts, falling several months behind on your payments and wondering if debt consolidation is right for you? If so, you're not alone. These days, many consumers in Arizona and all across America are in a similar situation, requiring help from skyrocketing credit card debts as well as unsecured debts like utilities, department store charges, or medical bills. The good news is, you have several options available to help you manage and reduce debts - including debt consolidation, debt settlement, or even bankruptcy.
Also known as a "debt management plan" or DMP, debt consolidation allows consumers with debts spread across multiple cards to combine them into a single, more structured, and more manageable payment plan made to a credit counseling agency. On the other hand, debt settlement allows you the opportunity to negotiate, or settle, with your individual creditors for a substantially reduced amount of your original debts. Both debt relief methods have become popular alternatives to bankruptcy - which has a more damaging and longer lasting impact to personal credit.
To find out how debt relief can help you reduce or pay off your debts, answer a few, simple questions and get a free debt relief analysis and savings estimate. Start now.
Benefits of Consolidating Debts
In a debt consolidation program, you can combine or "consolidate," credit card and unsecured debts into one, more affordable, and more manageable monthly payment made to a credit counseling agency or service that, in turn, distributes funds to creditors. When you enroll in a debt consolidation program, credit counselors review your outstanding debts, and how much money you can reasonably dedicate each month to paying down your debts.
If credit counselors determine that debt consolidation is the right plan or program for you, they typically develop a debt-reduction strategy and submit proposals (on your behalf) to creditors asking for reduced interest rates, or the waiving or elimination of any late fees or penalties. Creditors that agree to the proposals are placed into the debt management plan.
The goal with debt consolidation is to provide you with a single, more predictable, and more affordable payment plan - one that can direct more of your payment towards paying off the principal of your loans rather than just the interest. If followed faithfully, a debt consolidation program can help reduce your debts sooner than if you only continued making the monthly payments on your credit card debts at higher interest rates.
Debt Settlement Alternative
If you have the type of debt that qualifies for debt settlement or if you simply cannot afford to pay the full amount, settling your debts can typically allow you to negotiate with creditors for a reduced amount of what you originally owe. For many consumers, debt settlement or negotiation can offer an honest and legal way to pay back their debts without declaring bankruptcy.
Keep in mind, however, the potential risks involved: When you enroll in a debt settlement program, your credit score will typically decline because when you settle your debts, it usually involves "falling behind" on your payments in order to set aside funds that can be used to make a settlement offer (or what's also called a lump sum payment). In addition, as you fall behind in making payments, you can also face legal action for, essentially, defaulting on the terms of your credit card agreements.
But, in spite of all these risks, debt settlement has become a popular alternative for many consumers who want to avoid declaring personal bankruptcy.
Explore Your Debt Relief Options
Each individual's debt situation is unique and sometimes, finding a reasonable way to eliminate your debt may seem like an insurmountable task - especially if you have lost your job or are simply not earning enough. In addition to your debt crisis, if you are also experiencing other financial difficulties, the state of Arizona offers a variety of services that can provide you with basic necessities. On its website, go to the Citizens Services page, which lists many of the services designed for people who need financial help, including assistance with food, employment, housing, or even guidance on how to prevent foreclosure.
The bottom line is, if you are ready to tackle your credit card and unsecured debts, take the next step and find out what debt relief can do for you and your family. For many consumers, a debt consolidation plan can provide not only a more affordable and more structured payment plan, but it may also provide long-term budgeting skills. If you want to find out your debt relief options, request a free debt relief analysis and savings estimate today. Start here.