There are Five (5) Alternatives For Resolving Debt:
Debt Settlement
Debt Settlement, also known as Debt Negotiation or Debt Reduction, is an aggressive and popular approach to reducing one's unsecured debt. In general, it is a service designed to assist debtors in negotiating down and settling the principle amount owed to their creditors. In addition, a Debt Settlement program can reduce one's debt in as little as 2-4 years compared to 6-10 years it can take with CCCS or other debt management programs. Debt Settlement is an appropriate program and financially beneficial option for those with a serious amount of debt ($10,000 or more) and who are experiencing a true financial hardship.
Consumer Credit Counseling Services (CCCS)
Consumer Credit Counseling is an alternative for consumers experiencing financial difficulties and unable to make their minimum payments. Like Freedom Debt Relief’s program, Consumer Credit Counseling organizations act as an intermediary between you and your creditors. But Consumer Credit Counseling organizations typically attempt to reduce interest rate and fees on your debts, not the balances themselves. Through the reduction of fees and interest, Credit Counseling will generally allow you to get out of debt in about five years. However, you will end up paying back 100% of your balance plus interest, which will require a significantly higher monthly obligation than a typical debt negotiation program.
When evaluating Consumer Credit Counseling, check to see is if the organization is for profit or non-profit company. Non-profit Consumer Credit Counseling organizations are funded and supported by the credit card companies who you are making the payments to. This does create a potential conflict of interest, so be sure to understand if any Consumer Credit Counseling organization is collecting fees from both you and your creditors.
Consumer Credit Counseling organizations are right for some people, especially those who can afford the higher monthly obligation that is required in such a program. We have relationships with several leading organizations and will be happy to provide their information to you if that is what you decide is best for your situation.
To find out how what is the best program for your needs, please call today at 1-800-544-7211for a free consultation with one of Freedom Debt Relief’s Consultants.
Debt Consolidation Loans
Unfortunately, a Debt Consolidation Loan is one of the most common solutions people think of when they fall into financial difficulties. This is a problem because most people who get a debt consolidation loan find themselves in much deeper financial trouble than they were in to begin with.
Debt consolidation loans transfer debt from one place to another. While this may sound good, since many times it can appear to lower your monthly payments, a debt consolidation loan will not reduce the amount you owe.
You will still pay back 100% of the debt consolidation loan, plus interest. The interest rate is sometimes lower than before, but this is because debt consolidation loans are usually secured loans that cannot be lowered or negotiated. Once you sign up for a debt consolidation loan, you have just gone from an unsecured debt to a secured debt and have put your personal assets (e.g. your car or home) at risk. At that point if you can't pay your bills your creditors can come and take your personal property - thus creating a bigger problem than you had to begin with.
Debt consolidation is right for some people, especially those that are not at risk of falling behind on their new consolidation loan and who have the discipline not to charge back up the credit cards that now have empty balances and available credit. However, if you are struggling to make your payments, you should consider debt reduction, not debt consolidation. This way you are dealing directly with the problem, not temporarily avoiding debt problems.
Bankruptcy
Bankruptcy is a way to potentially get out of your debts. Unfortunately, it leaves a long lasting scar, and comes at a high price - financially, emotionally, and socially. It is a long and painful process and the repercussions can last for over a decade.
The financial impact is severe; a bankruptcy will stay on your credit report for 7-10 years. Every time you apply for credit, whether it is a home, a car, a lease, or insurance, you may be impacted. The long-term effect of higher rates may greatly outweigh the shorter-term impact of filing bankruptcy.
Additionally, most people do not realize that bankruptcy can stay on their court records for over 20 years - which means it can follow someone for the rest of their life. If you apply for a job, a loan, rent an apartment, or even insurance your bankruptcy filing may be easily uncovered.
Lastly, we have yet to find someone who is proud of filing bankruptcy. Most people will do anything to avoid filing bankruptcy, and for many of our clients, FDR's Debt Reduction Program is a perfect alternative.
Bankruptcy is not an easy or even quick fix. It is a very serious decision with serious consequences. If you are considering bankruptcy, you should contact a lawyer to discuss this option.
Making Monthly Minimum Payments
Unfortunately, millions of Americans who are struggling with their debts continue to just barely make their monthly payments. Most of these people just keep doing whatever they can to continue making minimum payments for the rest of their lives. If you are facing severe financial hardship, and making these minimum payments is making it difficult for you to make ends meet, then this is a no win situation. If you are only meeting your minimum payments, you are paying almost entirely interest charges; not paying down your debts.
This means that if you owe $10,000 today, it will cost you as much as $20,000 to $40,000 over the next 10-20 years before your debts are resolved.
If making your minimum payments and getting out of debt in a reasonable time frame is causing you a financial hardship, FDR's Debt Reduction Program can help you to negotiate reductions on your debts, avoid bankruptcy, and come to an agreement with creditors on your terms, not theirs.
*Clients who make all their monthly program payments pay approximately 50% of their enrolled balance before fees, or 71% including fees, over 24 to 48 months. Not all clients are able to complete our program for various reasons, including their ability to save sufficient funds. Our estimates are based on prior results, which will vary depending on your specific circumstances. We do not guarantee that your debts will be resolved for a specific amount or percentage or within a specific period of time. We do not assume your debts, make monthly payments to creditors or provide tax, bankruptcy, accounting or legal advice or credit repair services. Our service is not available in all states and our fees may vary from state to state. Please contact a tax professional to discuss potential tax consequences of less than full balance debt resolution. Read and understand all program materials prior to enrollment, including, for example, potential adverse impact on credit rating.
