Debt Relief Programs

For people who are buried under a significant amount of debt today, there are plenty of solid options that might get them out of the hole. Overwhelming debt can be more than just a financial problem. It can wreck a person’s whole life and derail their happiness. Because of this, many programs out there are designed to help individuals get themselves out from under the burden. What are those debt relief programs? Some of them are as follows.

Credit counselling programs
Credit counselling is the name given to debt management plans. These are programs where people sit down with someone experienced and work out a plan to better manage their debt. These programs allow a person to get a lower interest rate on the whole, but they come with stringent requirements. A person has to stay on top of payments, and they have to allow the credit counselling company to disperse the money to the individual creditors. This option is a solid one for people who are in just enough credit trouble to need help.

Debt settlement
Settling debt is something that comes with significant up-front cost, but a much lower end-game financial burden. This sort of program generally allows individuals to pay off their entire debt in one sweep. It requires a large lump sum payment, which can be a problem for many. It also requires some negotiating skill, as debtors work to get the best possible deal. Settlement programs can allow the debtor to be debt-free right away and at a price that is often a fraction of what they actually owed.

Unsecured debt consolidation loans
These are loans that individuals can take out directly from a lender to pay off all of their current creditors. This is essentially a restructuring of debt and it happens at a lower interest rate. A person will get a loan at 8% or 9%, for instance, and pay off their existing 15% debts. This serves to lower monthly payments on the whole and reduce the total amount of money paid to get out of debt.

Secured debt consolidation loans
Others choose to go the secured route, tapping into their home equity line of credit. When you pay off a home, you build equity in that home. You can borrow against this equity, and it is essentially a second mortgage when you do so. These loans are risky because they tie your home up when it did not have to get tied up. They provide access to very low interest rates, though.