Real debt consolidation solutions?
There are also debt relief companies that will negotiate for you. This, however, typically involves paying a fee to the company that's helping you to get loan relief or credit card debt relief. Also, keep in mind that you typically need to be past due before a creditor will consider settling a debt.
There are also debt relief companies that will negotiate for you. This, however, typically involves paying a fee to the company that's helping you to get loan relief or credit card debt relief. Also, keep in mind that you typically need to be past due before a creditor will consider settling a debt.
- Upgrade – Best for Bad Credit.
- Universal Credit – Best for Comparing Multiple Offers.
- Happy Money – Best for Flexible Repayment Terms.
- Achieve – Best for Paying off Credit Card Debt.
- Discover – Best for No Interest If Repaid Withing 30 Days.
Myth No.
Debt consolidation is a legitimate avenue to pay off debts, but it pays to research the credit counseling agency that offers this solution.
Looking up their reputation with the Better Business Bureau (BBB) and checking for any complaints filed with your state's attorney general is a great start. Compare multiple offers: Don't take the first offer you see. There are plenty of reputable debt consolidation loan lenders and programs.
Is the Financial Hardship Program Legitimate? There is no official United States government agency or organization called the “Financial Hardship Department.” But with credit card debt reaching an all-time high of $930 billion, unrelenting scammers want you to believe that such an entity exists [*].
It's the corporate version of debt management programs offered by nonprofit credit counseling agencies. The card companies take a look at your income and debts and try to figure out how much you can comfortably afford to pay every month, until you eliminate all of your debt.
Freedom Debt Relief is a legitimate company. It is BBB-accredited and is rated A+. It is also a founding member of the American Fair Credit Counsel (AFCC) and a member of the International Association of Professional Debt Arbitrators.
National Debt Relief, founded in 2009, is a reputable debt relief company with solid experience and dedication to securing results for customers, helping them settle debt for less than they owe. Its approach to customer service shows its commitment to customer experience and satisfaction.
Debt settlement is an alternative to a debt consolidation loan that you may consider when you have no other options besides bankruptcy. The process involves negotiating with lenders with the hope they will accept less than what you owe them. Debt settlement companies can manage the process for you—for a fee.
Will a debt consolidation ruin my credit?
If you do it right, debt consolidation might slightly decrease your score temporarily. The drop will come from a hard inquiry that appears on your credit reports every time you apply for credit. But, according to Experian, the decrease is normally less than 5 points and your score should rebound within a few months.
Paying off your credit card, whether it's with a debt consolidation loan or not, does not actually cancel the card. While it does bring your balance down to zero, the card will still be open and active.
Lenders might not advertise it, but most of them have a minimum credit score required to get a loan. If your score is less than 670, you might be out of luck for a debt consolidation loan. Even if you're over 670, a problematic debt-to-income ratio (more on that below) or payment history could derail your loan.
In addition, to protect the most vulnerable borrowers from the worst consequences of missed payments following the payment restart, the Department is instituting a 12-month “on-ramp” to repayment, running from October 1, 2023 to September 30, 2024, so that financially vulnerable borrowers who miss monthly payments ...
Debt consolidation itself doesn't show up on your credit reports, but any new loans or credit card accounts you open to consolidate your debt will. Most accounts will show up for 10 years after you close them, and any missed payments will show up for seven years from the date you missed the payment.
Bankruptcy is your best option for getting rid of debt without paying.
This type of debt can be unsecured or secured, though most lenders only offer unsecured loans. Since hardship loans are a type of personal loan, they also have fixed annual percentage rates (APRs), repayment terms and monthly payments.
Government Help With Credit Card Debt
The bad news is that "government debt relief programs" don't technically exist for most people. But the good news is that the federal government does offer a list of programs and services that can help you pay your bills.
- Opt for debt relief. One powerful approach to managing and reducing your credit card debt is with the help of debt relief companies. ...
- Use the snowball or avalanche method. ...
- Find ways to increase your income. ...
- Cut unnecessary expenses. ...
- Seek credit counseling. ...
- Use financial windfalls.
- Step 1: Stop taking on new debt. ...
- Step 2: Determine how much you owe. ...
- Step 3: Create a budget. ...
- Step 4: Pay off the smallest debts first. ...
- Step 5: Start tackling larger debts. ...
- Step 6: Look for ways to earn extra money. ...
- Step 7: Boost your credit scores.
Can you do a hardship withdrawal to pay off debt?
There are a few situations where it makes sense to tap your 401(k) to get rid of personal debt. All of them fall into the category of hardship withdrawals, which are designated for “immediate and heavy” financial needs.
Paying off your debt in this way might seem more important, but the damage to your credit score can last for years. Settled debts also stay on your credit report for up to seven years and impact your future access to credit.
Freedom Debt Relief offers debt settlement services, which work to settle eligible unsecured debt accounts for less than what you owe. Each month, you deposit money into an FDIC-insured program account that you control.
First, National Debt Relief reviews your credit history to make sure you're eligible. There is no minimum credit score requirement, but keep in mind NDR can only settle unsecured debt like credit cards or personal loans.
While debt settlement can potentially help you save a significant amount of money, the associated costs should not be overlooked. These fees will typically range from 15% to 25% of the total enrolled debt — but can also vary based on the company you choose to work with.
References
- https://www.investopedia.com/freedom-debt-relief-review-5094071
- https://wallethub.com/answers/cc/how-long-to-pay-off-50000-credit-card-debt-1000423-2140858504/
- https://www.forbes.com/advisor/debt-relief/freedom-debt-relief-review/
- https://www.nerdwallet.com/article/finance/consolidate-debt
- https://www.cnn.com/cnn-underscored/money/is-debt-consolidation-a-good-idea
- https://www.incharge.org/understanding-debt/credit-card/hardship-programs/
- https://www.nerdwallet.com/article/finance/national-debt-relief-debt-settlement
- https://www.consumerfinance.gov/ask-cfpb/what-do-i-need-to-know-if-im-thinking-about-consolidating-my-credit-card-debt-en-1861/
- https://www.bankrate.com/finance/credit-cards/ways-to-pay-off-credit-card-debt/
- https://www.lendingtree.com/personal/hardship-loans/
- https://www.consumercredit.com/debt-consolidation-advantages-and-disadvantages/
- https://www.forbes.com/advisor/debt-relief/debt-relief-what-it-is/
- https://www.debt.org/consolidation/
- https://www.debt.org/consolidation/myths-and-facts/
- https://www.bankrate.com/personal-finance/debt/how-to-consolidate-debt-without-hurting-credit/
- https://www.incharge.org/debt-relief/credit-counseling/success-stories/how-i-paid-off-30000-in-credit-card-debt/
- https://money.usnews.com/credit-cards/articles/the-truth-about-credit-card-debt-forgiveness
- https://studentaid.gov/debt-relief-announcement
- https://www.experian.com/blogs/ask-experian/pros-and-cons-of-debt-consolidation/
- https://www.experian.com/blogs/ask-experian/can-you-get-debt-consolidation-loan-with-bad-credit/
- https://www.incharge.org/debt-relief/debt-consolidation/loan-rejection/
- https://www.experian.com/blogs/ask-experian/alternatives-to-debt-consolidation-loan/
- https://www.incharge.org/debt-relief/debt-settlement/debt-settlement-pros-cons/
- https://www.lendingtree.com/debt-consolidation/freedom-debt-relief-review/
- https://www.bankrate.com/personal-finance/debt/pros-and-cons-of-debt-consolidation/
- https://www.investopedia.com/how-to-get-a-debt-consolidation-loan-8350809
- https://www.whitehouse.gov/briefing-room/statements-releases/2023/06/30/fact-sheet-president-biden-announces-new-actions-to-provide-debt-relief-and-support-for-student-loan-borrowers/
- https://www.incharge.org/debt-relief/debt-settlement/buying-a-house-after-settlement/
- https://www.forbes.com/advisor/debt-relief/consolidate-debt-with-high-debt-to-income-ratio/
- https://www.cnbc.com/select/debt-consolidation-pros-cons/
- https://www.federallawyers.com/debt-relief/qualifying-for-a-mortgage-after-debt-settlement/
- https://www.aura.com/learn/financial-hardship-department-scam
- https://www.experian.com/blogs/ask-experian/why-was-my-debt-consolidation-loan-denied/
- https://en.wikipedia.org/wiki/Debt_relief
- https://www.debt.org/bankruptcy/eliminating-debt-without-paying/
- https://www.forbes.com/advisor/personal-loans/consolidate-bills/
- https://www.cbsnews.com/news/ways-to-pay-off-10000-in-credit-card-debt/
- https://wallethub.com/answers/pl/monthly-payment-on-50000-personal-loan-1000450-2140762731/
- https://www.equifax.com/personal/education/debt-management/articles/-/learn/what-is-debt-consolidation/
- https://www.investopedia.com/best-debt-relief-companies-4846588
- https://www.experian.com/blogs/ask-experian/how-long-does-debt-consolidation-stay-on-credit-report/
- https://www.bankrate.com/loans/personal-loans/using-a-personal-loan-for-debt-consolidation/
- https://wallethub.com/answers/pl/how-to-get-out-of-debt-with-no-money-and-bad-credit-2140778830/
- https://fee.org/articles/how-i-paid-off-20-000-in-debt-in-6-months/
- https://www.cnbc.com/select/how-to-pay-off-credit-card-debt-in-one-year/
- https://www.investopedia.com/national-debt-relief-review-5092836
- https://www.consolidatedcredit.org/ask-the-experts/debt-management-fees/
- https://www.debt.org/consolidation/companies/national-debt-relief/
- https://www.nerdwallet.com/article/finance/find-extra-money-pay-debts
- https://www.consolidatedcredit.org/ask-the-experts/does-debt-consolidation-close-credit-cards/
- https://www.forbes.com/advisor/personal-loans/best-debt-consolidation-loans/
- https://www.bankrate.com/loans/personal-loans/how-do-you-qualify-for-a-debt-consolidation-loan/
- https://www.bankrate.com/loans/debt-consolidation/national-debt-relief/
- https://www.creditninja.com/can-i-still-use-my-credit-card-after-debt-consolidation/
- https://www.cbsnews.com/news/best-debt-relief-companies/
- https://www.bankrate.com/personal-finance/debt/get-out-of-debt-on-low-income/
- https://www.cbsnews.com/news/how-much-does-a-debt-relief-program-cost/
- https://www.investopedia.com/terms/d/debt-relief.asp
- https://www.bankbazaar.com/personal-loan-for-debt-consolidation.html
- https://www.investopedia.com/credit-card-debt-consolidation-a-step-by-step-guide-8418444
- https://www.lendingtree.com/debt-consolidation/avoid-debt-consolidation-scams/
- https://www.cnbc.com/select/does-debt-consolidation-hurt-your-credit/
- https://www.jgwentworth.com/whats-difference-between-debt-consolidation-and-debt-resolution
- https://www.forbes.com/advisor/personal-loans/pros-and-cons-of-debt-consolidation/
- https://www.incharge.org/debt-relief/debt-consolidation/using-401k-loan-to-pay-off-debt/
- https://www.forbes.com/advisor/personal-loans/best-debt-consolidation-loans-bad-credit/
- https://www.investopedia.com/ask/answers/110614/whats-difference-between-debt-consolidation-and-debt-settlement.asp