One of the biggest challenges faced by debtors is understanding the numerous debt relief programs available to them. With so many options available, how does a debtor know which debt relief program is the right one for their specific debt challenges? The situation becomes increasingly complicated when one realizes that more often than not a combination of debt relief strategies are necessary to resolve what is often a persons complex combination of debts (i.e. mortgages, credit cards, student loans, medical bills, etc.).
As a consumer advocate and debt relief consultant I have spent the last 12 years of my life researching all consumer debt relief strategies so that I can help consumers develop a custom debt relief plan. Essentially I have done all of the work for consumers by sifting through the all of the strategies and companies offering help to identify the goods ones from the bad ones, and more importantly separating the scams from the legitimate debt relief programs. What follows is a list of the most common debt relief strategies and a brief description of each. For more specific information and the opportunity to for me to create a free, custom debt relief plan for you, visit my website at the bottom of this post
Most Common Debt Relief Options
1. Do Nothing: Unfortunately too many people chose this option and it is the worst mistake a person can make. The first step towards resolving any problem is admitting that one exists in the first place. Doing nothing is certainly the most expensive and detrimental option.
2. Debt Relief Software: There are a variety of sophisticated computer software options available that use complex mathematical formulas to help debtors identify the most efficient and effective debt paydown scenarios that take into account the amount of debt, types of debt, amount of available monthly income, debt interest rates, etc. Some of these programs, like the one I recommend called Debt Paydown, include live coaching. Typically the debts are repaid in full but with huge interest savings and the convenience of just following the repayment plan produced by the software.
3. Credit Counseling: This conservative debt relief strategy involves working with a non-profit credit counseling organization which, through special privileges the non-profit has, are able to negotiate reduced minimum monthly payments and reduced interest rates making the debt repayment more affordable for the debtor and saving the debtor money through reduced interest. The debt principal is repaid in full but interest savings are achieved. This plan also creates one convenient monthly payment to the non-profit rather than having to make multiple payments to multiple creditors.
4. Debt Consolidation Loan: The debtor obtains a loan from a single organization that is used to pay back some or all of the debtor’s debts. Now the debtor has a single loan repayment to the lender, ideally with a reasonable interest rate. The debt principal is paid in full, but the debtor achieves the convenience of a single repayment on the loan, and ideally interest savings. One of the problems with Debt Consolidation Loans is qualifying for the loan in the first place and/or having to put collateral up for the loan, like a loan against one’s home. That puts the home at risk if payments are missed.
5. Debt Settlement/Debt Negotiation/Debt Compromise: Most creditors will accept less (i.e. “settle”) than the full balance of a debt than risk not getting paid at all because the debtor files bankruptcy. It is not uncommon for a creditor to accept 50% or less and consider it payment in full, especially if the debtor can make that reduced payment as a lump sum payment. Debtors can attempt to negotiate this settlement themselves or hire professionals to do it for them. This is a very common debt relief program and there are unfortunately many bad debt settlement companies out to take consumer’s money and not provide any real services. I recommend Debt Compromise which is a form of debt settlement where the fees that are paid are based on the % of money the company actually saves for the client.
6. Debt Transfer: There are professional organizations that will legally allow consumers to transfer their debt to the organization, for a small fee, and in doing so, the consumer is no longer legally liable for the debt, rather, the debt becomes the legal obligation of the organization that contractually accepted it. This is a sophisticated and little known debt relief program, but one that has huge savings potential. There are only a small handful of organizations that offer this service and I can put debtors in touch with them.
7. Debt Invalidation: There is a growing movement among attorneys who assist consumers with challenging the very validity of the debt. Meaning, in some instances fraud exists in the origination of a debt or loan, and, in such cases, attorney have had some success in getting the debt invalidated, which eliminates the debt for the consumer. This is a complex debt relief strategy and one I can explain further during a telephone consultation.
8. Bankruptcy: While bankruptcy is a legitimate debt relief solution for some, it should only be considered as a last resort by most, as usually alternative debt relief options are better solutions for most debt problems. With bankruptcy, the debtor essentially involves a bankruptcy court and judge to help them work out a payment plan or in some cased free the debtor from having to repay at all. Bankruptcies have a lasting negative impression on a consumer’s credit report and also can also be demoralizing to the debtor as bankruptcy carries with it a negative social stigma. Be sure to carefully consider all other options before filing bankruptcy.
9. Mortgage Refinancing/Loan Modification: For most people their mortgage payment is their largest debt and by changing the terms of their loan the person can sometimes reduce the amount of their monthly mortgage payment, freeing up money that can often be used to pay down other debts. This option involves obtaining a new home loan that ideally has a lower interest rate which allows for the lower monthly payment. Such loan modifications are currently difficult to obtain as many homes are now worth less than they originally were, and this option also typically requires the person to have a good credit score.
10. Mortgage Elimination Programs: Similar to the Debt Invalidation strategy discussed above which is mostly used for credit cards, it is believed that more than 90% of home loans contain violations and fraud that, if uncovered, can be used to eliminate the mortgage altogether. This sophisticated option is increasingly popular as a result of all of the bad loans issued during the recent real estate bubble. This option typically involves an audit of the mortgage/closing documents to determine if violations exist, and then may or may not involve the assistance of an attorney to enforce the violations in an attempt to eliminate the mortgage. I can recommend a company the currently has helped more than 100 homeowners eliminate their mortgages and stay in their homes free and clear.
Clearly there is an incredible variety of debt relief programs available to consumers in need of help. It is almost impossible for the average consumer to investigate all of the various options and obtain a thorough understanding or each in order to make an educated decision as to which option(s) is best for their specific situation. The best option is to consult with a debt relief expert like myself, who can help them evaluate their best solution. For more information about debt relief programs that are proven to work, and for an opportunity to receive from me a free debt relief consultation, visit my website at www.NewDebtRules.com/memberhome
Sincerely,
Doug Johnson
Consumer Advocate, Debt Relief Consultant, Radio Talk Show Host, Author, Lecture
info@relieveyourdebt.com
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