Debt relief provides a solution to their massive debt issues, especially if they’ve either exhausted all options regarding getting rid of their debt or don’t know where to start.
The term debt relief is commonly defined as:
• the forgiveness or reorganization of debt in any form to a party obligated to pay, either in full or partial alleviation from their financial commitments or debt burdens.
Debt relief can consist of reducing an outstanding debt by a full or partial amount, lowering interest rates on due or past-due loans, extending the duration of one’s loan terms and other solutions that may be mentioned by a debt counselor.
A creditor only considers debt relief in the case of severe debt, making the debt solution a better alternative to paying back the debts. Debt relief helps individuals and businesses, in addition to the larger scale populated areas and even independent countries.
A consumer should always compare their options when considering deft relief in any form. Even when seeking debt counseling, there’s a lot of differing factors in many of the programs out there. In a debt relief program, a consumer will be able to find out how debt relief will affect their credit score, the available tax-related options they have and the debt relief options available from the start.
These are several types of debt relief options available:
• Debt management provides an assessment of one’s financial situation, wherein the interest rates of outstanding debts are lowered through negotiation. This allows one to comfortably pay their remaining bills at an affordable rate.
• Debt consolidation is a plan where one’s outstanding debts are consolidated into a single, manageable monthly payment. High interest and unsecured debts are typically treated using a debt consolidation plan, especially if one can’t manage their payments anymore.
• Debt settlement reduces an outstanding balance from a particular debt, after a successful negotiation with creditors. The remaining, negotiated amount is then accepted by the creditors as a full payment.
• Bankruptcy is considered a last resort option in debt relief. When one files for bankruptcy, their non-exempt assets may be liquidated or they may have their debts restructured to fulfill expectations of creditors. Chapter 7 and Chapter 13 bankruptcy are typically filed under the Federal Bankruptcy Code.
Relieving one’s debt can consist of simply reorganizing one’s financial plan or seeking assistance from a governmental organization or for-profit debt counseling services. Regardless of the type and amount of debt one may have, seek advice before completely relieving recorded debts.