If you were to go to your friendly, neighborhood personal banker and ask him or her about debt relief, you’d probably get one of two reactions. First, you may be told, “Gosh, I’ve never heard of that.” Or second, you might be told “Well, that’s just not a good way to get rid of debt because it can have such a negative effect on your credit score.”
A debt consolidation loan
The reason why bankers don’t want you to know about debt relief is because they can’t offer it. That hypothetical personal banker might try to sell you a debt consolidation loan because that’s what the bank has to sell. And while one of these loans could help they do have their limitations.
The pros and cons
The way a debt consolidation loan works in simple. You just borrow enough money to pay off all of your debts, which will rid you of all those credit card companies and debt collectors that have been hounding you unmercifully. In fact, that’s one of the biggest benefits of a debt consolidation loan. The second big benefit is that you will have a lower monthly payment than the total of the minimum monthly payments you’re probably making now.
The biggest con of a debt consolidation loan is that if you have to borrow a lot of money, say $15,000 or more, you’ll probably have to try for a secured loan. This is one where you have to provide an asset as collateral and that asset will most likely be your house. You’ll probably have to get either a homeowner’s equity line of credit (HELOC) or second mortgage–if you have enough equity in your house that you can borrow what you need to pay off all your debts. It will most likely take you seven years or more to pay off that loan and your home will be at risk during all those years because should you default, the lender can repossess it.
So, what is debt relief?
Debt relief is another way to describe a strategy called debt settlement. The simplest way to explain it is that you contact your creditors and offer to settle your debts for much less than you owe. In return for them lowering your debt, you promise immediate cash settlement–that you will either wire the money or send them cashiers check right that day.
Why would credit card companies ever agree to this?
Credit card companies and other lenders won’t agree to settle your debts unless you haven’t been paying them for six months or more. When they do agree it’s for two reasons. The first is that they would rather get “half a loaf” than to see you file for bankruptcy. The second reason is, of course, because you’re promising to pay them immediately.
It takes some kind of intestinal fortitude
You could do debt settlement yourself if you have the requisite amount of intestinal fortitude as you have to be tough enough to fend off all your creditors for those six months when you’re not making payments. You will also have to be a skilled negotiator because, trust me, your creditors have people with years of experience putting pressure on people like you to pay everything you owe.
Why a debt settlement company
Most people realize they don’t have what it takes to handle debt settlement themselves. They’ll hire a debt settlement company such as National Debt Relief to settle their debts for them. Our counselors have excellent working relationships with the credit card providers and can usually negotiate settlements that will save you thousands of dollars. They will work to get both your balances and interest rates reduced so that you can get out of debt in a reasonable amount of time–and with an affordable payment plan.
You don’t have to be have your life ruined by credit card debt. Call our toll-free number today to get started or fill out the form you’ll see on the right side of this page for a free quote.
I am an associate at National Debt Relief, which is a Debt Consolidation Company that has helped thousands of Americans facing credit card debt problems. We help with debt settlement, debt management, and other debt related financial crisis' facing consum