Debt relief is exactly what it sounds like – the repayment of debt that’s been accumulated in a legal way. When debtors realize they can no longer keep up with their debt obligations, they seek debt relief solutions. But debt relief solutions are often difficult to find and even more difficult to implement. So how exactly do debt relief solutions work?
Debt relief comes in many forms, the most common of which is debt settlement. Essentially, debt settlement involves negotiating with your creditors to settle the debt at an amount lower than what you owe. The debt settlement professional will contact your creditors and attempt to negotiate a debt reduction that you can afford. Debt reduction is often achieved through the use of a debt settlement company, although it may also be accomplished on your own through a concerted campaign of telephone calls and letters.
Debt relief solutions come in many different shapes and sizes for consumers. For some consumers, debt settlement may mean the complete liquidation of all their debt and repayment of their debts in full. In other cases, debt relief may simply mean negotiating a more affordable monthly payment to eliminate interest costs and keep debtors from declaring bankruptcy. For other consumers, debt relief may simply mean reducing or eliminating their revolving balances and extending the terms of their existing credit lines. And, of course, for other consumers, debt relief could mean none of these things, leaving them with the same financial problems they’ve faced in the first place.
In some cases, debt relief may be a more appropriate debt relief solution for consumers who have substantial, long-term medical expenses or who have experienced a decline in their living standards, which has resulted in a significant increase in their debt. For other consumers, debt relief may simply mean agreeing to a temporary suspension of premium payments on an existing credit account. This can allow consumers to reduce the financial impact of their monthly premiums while continuing to pay for the same service or accounts. Consumers may also elect to transfer existing balances to a lower interest rate debt relief program.
There are a number of debt relief options available to consumers. To be eligible for some of these debt relief programs, consumers must demonstrate a legitimate need for the type of assistance. Some examples of these types of programs include: debt settlement, consolidation, payment plans, and payment deferment. These programs often require consumers to demonstrate a net income of at least 20% of the monthly debt payment in order to be eligible.
When debt relief programs are properly applied, they can have a profound positive impact on consumer finances. As the economy continues to recover, there are a growing number of reputable debt settlement companies that are providing consumers with the type of financial services that they need to manage their debt effectively. Debt settlement companies such as Optimal Debt Solutions are becoming more popular due to the federal stimulus package and the easy terms that creditors are offering to their customers. Instead of receiving only partial payments from creditors, many creditors are agreeing to settle for more than half of what is owed in order to receive any type of payment at all. In addition, many creditors are requiring that debt settlement companies hold the funds for the full amount that is owed to them in case of a lawsuit.