Debt Relief

Debt can be a very sensitive topic to deal with it. When we need money desperately and resort to borrowing it, we forget that it may not be the best thing to do in the long run if we can’t pay it off. Unable to pay debt can have an adverse effect on your psychological health and also your credit score and that is where debt relief companies come in.

What is a debt relief company?

Companies like a SiFinances help you get a better payable interest rate on your debt and may even be able to get the amount reduced to one single payment. This implies that instead of various monthly payments, you would pay one lump sum amount to the creditor and rest will be pardoned. They basically aid in tackling credit card debt which is the most common form held by an individual.

How much the debt relief company charge?

The charge can vary depending on debt relief company. They can charge you a small amount for all the services they provide. However, a couple of them do not have any upfront fees and will only charge you when they are able to successfully negotiate to reduce your debt. The fee amount chargeable can range from 15-29%, depending on the state you live in and the amount of debt. Average credit card interest rate varies from 12-16% and that too monthly on every payment you miss. Therefore, seeking out services of a debt relief company can prove to be a smarter option as they negotiate for a single payment.

What kind of negotiation do they undertake?

The negotiators at these companies are very knowledgeable in consumer laws, credit reporting, billing and Fair Practices act and can negotiate on valid points with your creditors. You also have the option to negotiate yourself; however, it can prove to be a hassle and thus best left to the company negotiators. While the negotiations are on, you won’t be able to use your credit cards.

How does it affect my credit score?

It does hamper your credit score for a while, but your score improves after the complete negotiated amount has been paid off. This is not as bad as bankruptcy where you must start from scratch and build your credit which can take a long time and in the meantime you will not be eligible to take any more loans from the creditors.

If you stick to making consistent monthly payments to cover your debts, it can take years to pay it off completely and you can end up paying twice/thrice the original amount!! With a debt relief company, you can assume to pay it all off in the next two years, considering you save up a settlement fund to be able to make a single payment. If you are already unable to pay your bills and know that it would be a while for you to pay it all off, seek help soon, before it’s too late.