What are the different debt relief options available to you?
Debt management plan
A debt management plan might be a good debt relief option if you have credit card debt you could pay back. Your total amount is reduced thanks to the elimination of interest rates and late fees. You make a single payment monthly to a credit counseling agency so that your creditors can be repaid. With this option, your credit card accounts are closed, and you cannot use credit until after your debts have been fully paid off.
Debt settlement is an option that allows you to stop paying your creditors and pay the money you owe into an escrow account. You either turn to a debt settlement company to negotiate lesser payments with creditors to repay your debt or handle things by yourself. Depending on the circumstances, debt settlement can take years. You can also expect to continue receiving calls from debt collectors. Lawsuits can also come your way, so it might not be the best option for everyone.
Debt consolidation loans
Another way to alleviate your debt is to get a debt consolidation loan. It can help you combine multiple debts into a lump sum so that you can pay them back in monthly payments. Although this option causes your credit score to dip, it could be worth it in the long term as you make regular timely payments and avoid taking on additional debt. Debt consolidation loans sometimes include substantial interest rates.
Knowing which debt relief solution is best for you can help you relieve your financial burden sooner.