Find the Best Debt Relief Programs Available and Eligibility Criteria

Filed in Debt Relief by on November 21, 2020 0 Comments

This page provides detailed list of all the best debt relief programs available and how each one works to help you pay off your debt. Here you will learn more about debt relief, how debt relief works, the different debt relief options, and all other important information you might need about debt relief. Stay tuned.

What Is Debt Relief?

Debt relief or debt cancellation is the partial or total forgiveness of the debt of individuals, corporations or states. Debt relief can take many forms: reducing the outstanding principal amount, either in part or in full, reducing the interest rate on outstanding loans, or extending the term of the loan, among others.

Creditors may only be willing to consider debt relief measures when the repercussions of debt default by the indebted party (ies) are perceived to be so severe that debt relief is a better alternative. Debt relief can be extended to any heavily indebted party, from individuals and small businesses to large corporations, municipalities and even sovereign nations.

How Debt Relief Works?

In some situations, debt relief may be the only way to avoid bankruptcy. If, for example, a huge debt burden makes it difficult to service loans, lenders may be inclined to restructure debt and provide a relief rather than risk the borrower defaulting on its obligations and increasing overall credit risk. Refinancing a mortgage at a lower interest rate is one simple example of debt relief.

Another common form of debt relief involves consolidating debt or combining several higher interest rate loans into one lower interest rate loan. Consumers can consolidate their debts in several ways into one payment. One method is to consolidate all of their credit card payments into a new credit card, which can be a good idea if the card charges little or no interest during an introductory period. They can also use the balance transfer feature of an existing credit card (especially if it offers a special promotion on the transaction).

Home equity loans and home equity lines of credit (HELOC) are another form of consolidation that some people aspire to. Typically, interest on this type of loan is deducted for taxpayers who itemize their deductions. The federal government also offers several options for people looking to consolidate their student loans.

It is important to note that there are different rules for declaring bankruptcy, depending on the type of debt. If you are considering bankruptcy, it is wise to talk to a qualified attorney who specializes in bankruptcy laws in your state.

Types of Debt Relief

There are four major forms of debt relief;

1. Debt Consolidation

Debt consolidation is one strategy that exists that can make managing your debt far simpler by rolling all of your unsecured debts, generally credit card bills, and combine them into one monthly payment. If your credit score is good enough, you should lower both your interest rate and monthly payment.

2. Debt Management

If you have too much debt or are unable to repay your debt, a credit counseling agency may recommend that you pursue a debt management plan (DMP). With this approach, a certified credit counselor reviews your finances and develops the DMP. Each month, you send payments to the credit counseling agency and they use it to pay your creditors on an agreed-to schedule.

As part of the DMP, the agency may negotiate with creditors to waive certain fees or lower your interest rates. A DMP requires you to make regular, on-time payments, and you may make payments for several years. As part of the DMP, you may have to agree to not use or apply for any additional credit while you’re repaying your debt.

Credit scores are not a factor for joining the program, but if you miss payments, any concessions you received could be terminated.

3. Debt Settlement

With debt settlement, a company works on your behalf to convince your creditors to accept a reduced settlement instead of the full balance you owe. It may sound incredible, but the Consumer Financial Protection Bureau warns that debt settlement can be risky.

While the settlement process is underway, the debt settlement company will typically tell you to stop making payments to your creditors. During this time, late fees, penalty charges, and interest will continue to accrue, and your credit score can be negatively impacted. You could even end up in more debt than you started with.

Debt settlement companies typically charge high fees for their services. For example, the fee for National Debt Relief is 18% to 25% of your enrolled debt. And, the program can take up to four years to complete.

That debt settlement savings may make those fees and drawbacks worth it, but you should carefully consider your options before pursuing it. Also, keep in mind that there is a chance the debt relief company might not reach a successful negotiation. But they can only legally charge you if they have successfully negotiated your debt.

4. Bankruptcy

If you’ve exhausted your other options, declaring bankruptcy may make sense, but it should be a last resort. When you declare bankruptcy, the court will review your situation. If it agrees that you’re unable to repay your debt, it will issue a court order discharging the debt. That means you’ll no longer owe money on your credit cards, medical bills, or personal loans.

Because the debt is discharged, all debt collection activity stops. You won’t receive any more harassing phone calls or letters in the mail, and bill collectors can’t garnish your wages. However, bankruptcy has serious consequences.

Bankruptcy information can stay on your credit report for up to 10 years and can make it difficult to get credit, buy a home, or even qualify for life insurance. Plus, the bankruptcy process can be expensive. You’ll have to pay court fees and if you hire an attorney, their fees can be costly.

If you decide to pursue bankruptcy, you must get credit counseling from a government-approved organization within six months before you file. You can find a list of eligible programs on the U.S. Trustee Program website.

It should be noted that not all debt relief programs are suitable for every consumer. The success of each program often reflects resources, goals, and consumer commitment. There is no one-size-fits-all program that solves all financial problems, so review and make sure you are comfortable with the requirements and responsibilities associated with your chosen debt relief program.

How to Find the Best Debt Relief Company

Finding debt relief means you identify a solution that minimizes the burden of debt repayment. The goal is to reduce or eliminate interest charges and fees so that you can pay off your debt faster. So how do you know which solution is right for you? The answer lies in consumer credit counseling.

Credit counseling is not a debt solution in and of itself. It’s an easy, free way to find the debt solution you need. A certified credit counselor evaluates your debts, credit and budget to see where you stand so they can help you find the right solution for your needs.

Credit counseling simplifies your repayment process, ideally making it easier to pay off your debt. In some cases, credit counselors can negotiate lowered interest rates, reduced monthly payments and more with your creditors, which could save you money.

The credit counselor’s job is to arm you with all the information you need to make an informed decision. It’s important to find a good credit counsellor who has your best interests at heart. In general, steer clear of for-profit credit counseling agencies. Nonprofit agencies are more likely to charge lower fees and provide unbiased advice.

The first step is to make sure the credit counseling agency is certified. You can find these agencies through any of the following:

Once you find a credit counselor, set up a meeting to talk about your situation and ask for advice. A good credit counselor will analyze your full financial picture before making any recommendations.

Because credit counseling can have an impact on your credit, it’s important to check your score regularly to understand how certain actions impact it and determine what you can do to improve it.

Also, consider checking your credit report before and during the credit counseling process. This can help you pinpoint areas you need to address, and can also help you identify potentially incorrect or fraudulent information on your reports. If you find something, you can dispute it with the credit reporting agencies to have it corrected or removed. Depending on the situation, this could help your credit score.

Best Debt Relief Programs

We reviewed and compared the leading debt relief companies to find the ones that offer a transparent debt relief process with consistently positive results and reasonable fees. If you are looking for a company that can help you settle your debt, you should start your search here.

National Debt Relief: Best Overall

We picked National Debt Relief as the best overall based on its track record for results settling many debts for one-third the amount, overall transparency, and a money-back guarantee.

National Debt Relief was founded in 2009 with the main mission of helping consumers get out of debt through a reliable debt settlement program. This firm is incredibly transparent about its process and results—so much so that there’s a page on its website dedicated to real debt relief letters that show thousands of dollars in debt settled for as little as 36% of the amount originally owed. This company has proven results, and it has maintained an A+ rating with the Better Business Bureau (BBB).

National Debt Relief helps consumers begin the process by offering a free consultation with one of its debt counselors. From there, you will have the option to explain your situation and talk over potential solutions, including using National Debt Relief for debt settlement.

Like other debt settlement programs, this company has you set aside a specific amount of money in a separate account each month, which you will later use to settle your debts for less than what you owe. In the meantime, National Debt Relief helps coordinate your efforts and negotiates with your creditors on your behalf.

You won’t pay any upfront fees to use this service, although consumers normally pay between 15% to 25% of the total debt enrolled in the program by the time their debts are settled. Generally speaking, programs from this firm last for 24 to 48 months. National Debt Relief also offers a money-back guarantee for clients who are not satisfied with their results.

Accredited Debt Relief: Best for Debt Settlement

Accredited Debt Relief is the best settlement option based on its proven results and success on this type of debt relief with high-interest credit card debt over $10,000.

Accredited Debt Relief has been in business since 2011 with the main goal of providing debt relief options to families who need them. This company boasts an array of results on its website, with plenty of former customers settling their debts for as little as 30% of what they originally owed.

Like other debt relief companies, Accredited Debt Relief focuses its efforts on debt settlement. It starts potential clients with a free consultation with a certified debt specialist who can help them talk over their situation and options. If they are deemed a good candidate for debt settlement, Accredited Debt Relief helps them begin saving money in a separate account and stop using credit cards.

From there, the firm negotiates with creditors on your behalf, which can lead to a debt settlement that is considerably less than amounts owed. Accredited Debt Relief also offers a money-back guarantee that lets you cancel your program at any time without a penalty.

New Era Debt Solutions: Best for Customer Satisfaction

New Era Debt Solutions maintains a staff of attorneys ensuring that everything is done according to state and federal law giving consumers confidence in the job done

New Era Debt Solutions has been in business since 1999 and has helped clients settle over $250 million in debt. Clients will not pay any upfront charges for its services. Its plans also come without any monthly administration fees, and performance-based fees are only charged when you see results. New Era Debt Solutions maintains an A+ rating with the Better Business Bureau.3

Like other debt settlement companies, New Era Debt Solutions has its clients save money for debt settlement in a separate account. In the meantime, they negotiate with your creditors to help you pay less than what you owe.

According to the company, its clients settle their debts and become debt-free after an average of fewer than 28 months. The average client has historically settled their debts for 42.87% of what they owed. The company claims to lower both the balance and interest rates of debts.

Other benefits of New Era Debt Solutions include the fact it has attorneys on staff and an account management team is also assigned to each client from the start. The company also handles all of its work in-house and never outsources tasks to other unproven firms or contractors.

DMB Financial: Best for High-Interest Credit Card Debt

We picked DMB Financial as the best for high-interest credit card debt based on its dedication to helping consumers consolidate their debts into a new, lower payment, which can be especially helpful when it comes to growing debts with high interest rates.

Founded in 2003, DMB Financial has a long history of helping clients establish debt settlement programs. This company reports real-time results for its clients on its website, many of which show clients settling debts for as little as 30% of what they owed. DMB Financial is also a member of the American Fair Credit Council, which includes a select number of debt settlement companies that commit to the highest standards for their clients.

DMB Financial says that, through its process, it’s possible for you to become debt-free in 36 to 48 months. You can call the company for a free initial consultation with a program consultant who can help you talk over your situation and goals. From there, a program will be created for you, during which you will make monthly deposits into a separate account. DMB Financial will then negotiate with your creditors for you to pay less than what you owe on your debts.

While DMB Financial focuses on all unsecured debts, it claims to be able to help consumers the most with high-interest credit card debt. With one of its programs, you can consolidate all your bills into a single monthly payment you make into a savings account each month. This can be a lifesaver when your interest rates and bills are just too high and continue to grow as you make only minimum monthly payments.

CuraDebt: Best for Tax Debt Relief

While other debt relief companies shy away from tax debts, CuraDebt offers special assistance for consumers who owe back taxes. This program is offered on top of its traditional debt settlement programs that can help consumers become debt-free while paying less than what they owe.

CuraDebt has been in business since 2000, and it offers a free consultation for consumers interested in its debt relief programs. Like other debt relief companies, CuraDebt also displays an array of debt settlement letters on its website, many of which show consumers who settled debts for as little as 20% of what they owed. Additionally, the company reports that its customers typically pay approximately 20% of their enrolled debt amount in fees over time. There are no monthly administration fees.

Where many other debt relief companies don’t touch outstanding tax debts, CuraDebt offers specific assistance for consumers who owe back taxes and need help coming up with a plan while they manage other debts they have. This makes CuraDebt unusual in that it can help consumers who have multiple types of debt including taxes, credit cards, and personal loans.

Specifically, CuraDebt’s assistance for tax debt relief includes transparent, flat-fee pricing and help to settle and to negotiate on IRS and state tax debts. It even has federal and state tax experts on staff, and this assistance is available in all 50 states.

Freedom Debt Relief: Best Interactive Program

We picked Freedom Debt Relief due to the fact it offers an interactive client dashboard that lets clients track their progress.

Freedom Debt Relief has been in business since 2002 and currently employs over 2,000 highly trained debt experts and professionals. It starts clients off by offering a free consultation with a certified debt consultant who can help them talk over their debts and what they hope to accomplish. From there, they craft a personalized debt settlement plan that asks you to save a specific amount in a separate account to use for debt settlement later on.

One feature that helps Freedom Debt Relief stand out is its interactive process. Once you sign up for a debt settlement program and begin making deposits, you’ll qualify for a client dashboard that you can use to stay up to date on your program. This dashboard lets you see how much you have saved, how much you owe, and any progress Freedom Debt Relief has made negotiating debts on your behalf.

Freedom Debt Relief says its clients don’t pay any fees until work is done on their behalf. By the end of their debt settlement programs, customers typically wind up paying between 15% and 25% of the amounts they enrolled in the program. While Freedom Debt Relief cannot guarantee it will settle your debts, it claims that many of its clients wind up paying 50% or less of the amounts they once owed.

When Is The Best Time to Consider Debt Relief?

It makes sense to consider debt relief in the following situations:

  • You have significant consumer debt and can’t work out a repayment plan with your creditors on your own.
  • You have already cut your expenses and don’t have any extras to eliminate from your budget.
  • You are not able to boost your income.
  • You have no realistic expectation of being able to pay off your debt within five years.

If you’ve put together a detailed budget, tried your best to save money, tried to increase your earnings, but still can’t make ends meet, debt relief may be the best option for you.

How Does Debt Relief Affect Your Credit?

The effect of debt relief on your credit score depends on which option you use. Any solution that pays back everything you borrowed should have a neutral or positive impact on your credit. Reducing interest charges or eliminating fees does not result in credit damage. On the other hand, any solution that gets you out of debt for less than the full amount owed damages your credit score.

Consolidation will not damage your credit as long as you make all the payments as scheduled. The same is true of a refinancing or a modified loan. Negotiating a lower rate on a credit card will also not have any negative effect on your credit.

The impact of workout arrangements and credit card debt management programs is usually neutral or positive. These solutions help you avoid missed payments and build a positive credit history.  Most credit users don’t see any damage to their credit using these solutions. However, these methods will close the accounts. This can have a slight negative effect on your credit, but the damage is usually nominal.

Solutions like debt settlement damage your credit. You incur a seven-year negative remark on your credit report. Foreclosure and Chapter 13 bankruptcy also result in a seven-year credit penalty. Chapter 7 bankruptcy has a 10-year penalty.

Dealing with debt can be a grueling experience, but debt relief can help you achieve it. Before pursuing a debt relief program, be sure to do your homework to make sure you choose the path that best suits your finances and goals.

We hope you find this information useful. Please feel free to share it with friends, colleagues, and family members who you know may need this information. Thank you for your concern and do have a nice one ahead!

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