Fighting off growing debt is never easy. Especially if you’re unemployed amid a global pandemic. But fortunately, there are still many debt relief options available. Debt relief companies are especially busy now. But you can still take advantage of some of the best debt relief options for free.
Let’s go over the best courses of action available to you right now.
Your Best Debt Relief Options
Consolidation Loans
Personal consolidation loans can come from many different sources. Banks, credit unions, and alternative lenders all offer debt consolidation.
When you take a consolidation loan, you get one large loan to immediately pay off all your smaller loans. This can provide an immediate boost to your credit score. More importantly, it also gives you one simple loan to pay off instead of several. You may also have more time to pay off your loan and a better rate.
If you’re looking to consolidate credit card debts, this is one of your best debt relief options. A personal loan for debt consolidation should have lower interest rates and a relatively long repayment period. That allows you to have an easier time paying your debts off.
Debt Management Resources
Any debt relief company should have free educational material for you to use. That’s true of both non-profit and for-profit organizations.
If you go to a debt management organization, you should also be offered a free consultation. Your counselor can offer you the best resources for you based on your situation.
A debt management counselor can also offer you a personal financial plan. This advice can help you take the necessary steps to manage your debt.
Debt Management Programs
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When counseling and education alone aren’t going to solve your issues, you can enroll in a debt management program. These programs are step-by-step processes that aim to free you of debt.
The first step of a debt management program will be your consultation. This part will usually be free. If your counselor thinks you need a debt management program, they will enroll you in one.
Debt management programs typically involve debt consolidation as a start. You will no longer pay your creditors directly. Instead, you will give the money to the debt management company and they will disperse your money to your creditors.
While your debt management professionals handle repayment, they will also try to get you better rates and terms. They may try to negotiate for longer terms, lower rates, or even some debt forgiveness. Because lenders and credit card providers would rather receive some of your money than none of it, they might agree to lower your debt burden.
This may sound simple, but it’s impossible to do on your own. Debt management companies typically have long-standing arrangements with credit card companies and lenders. They know how to work with these creditors to provide you with a better repayment experience.
One thing you need to be aware of is that you truly must make timely payments on a debt management plan. If you miss a single payment, oftentimes the plan falls apart and you’re on your own again.
Bankruptcy
Bankruptcy is far from the best debt relief option. But when even the best debt management program can’t save the day, bankruptcy is the next best thing. It’s certainly better than debt settlement programs.
You can declare bankruptcy on your own. But you can also get bankruptcy counseling from debt relief specialists. If you go to a non-profit, their services will be free.
When you declare bankruptcy, you’re cleared of all your debts and lose all your credit. Your credit score will fall drastically and you’ll have a bankruptcy on your credit report for 10 years.
This isn’t a great option, but it’s the best one when you’re finances are at the point of no return.
Government Coronavirus Resources
Amid the global COVID-19 pandemic, the US Government is offering benefits related to:
- Unemployment assistance
- Healthcare
- Food and nutrition
Additional government benefits related to COVID-19 are changing, and additional benefits may be announced in the future. Refer to the official government websites for up-to-date and accurate information.
These benefits were not necessarily meant to be debt relief options. But they can serve as such if you’re one of the millions of American employees or business owners whose income has dropped amid the response to the pandemic.
How To Find The Best Debt Relief
The best debt relief service providers, companies, and lenders are transparent and empathetic. The Better Business Bureau offers guidelines for choosing a debt relief service. They also provide a list of all the best debt relief companies that are accredited nationwide. We’d suggest you check with them if you’re considering any particular lender, counselor, or debt management company.
Always consider your options carefully. If you’re not sure what course of action is best for you, it’s probably best that you start with a free debt counseling service.