Debt Consolidation - Ohio
With the average Ohio resident carrying high balances on their credit cards, typically upwards of $18,000, it is no surprise that the need for debt relief has risen. In fact, many residents are struggling with debts from credit cards and unsecured debts (like medical bills, retail store charges, and utilities) due to any number of reasons. These include personal hardships (one of the leading causes of debts) such as loss of a job or income and medical bills. If you are faced with the same dilemma, you might be interested in how debt consolidation can help you.
Facilitated by credit counselors, debt consolidation allows you to combine your high-interest credit card and unsecured debts into a single, simplified, and easier-to-manage payment plan. For many consumers, debt consolidation can be an effective approach to reducing their debts. However, there are other debt relief options available. An alternative is what's known as debt settlement, or debt negotiation. With this approach, a consumer is given the chance to try and settle with their creditors for substantially less than their original debts. These days, both options have become popular alternatives to declaring bankruptcy, which results in a more severe and long lasting impact to one's credit.
If you would like to compare your debt relief options, request a free debt relief estimate along with a savings quote.
Debt Consolidation: What You Need to Know
When consumers enroll in a debt consolidation program, also known as a debt management plan (DMP), they initially undergo a one-on-one consultation with credit counselors. Once credit counselors determine your debt situation and how much money you can reasonably allocate to paying off your debts, they typically submit proposals to creditors asking for more lenient payment terms - like reduced interest rates or waiver of certain fees and other penalties. The goal is, with a more affordable and more structured payment plan, you can, ideally, pay off your debts sooner than if you only continued to make the minimum payments at higher interest rates.
Creditors that agree to extend those proposals are entered into the debt management plan, and they typically receive payment directly from the credit counseling agency. For those creditors that are not entered into the plan, consumers are still required to make their payments under the original credit card agreements.
Credit Card Debt Settlement
For many consumers, debt settlement is another popular alternative to bankruptcy. With this approach, consumers hope to negotiate, or "settle," for less than what they actually owe. The process typically begins with a consumer choosing to redirect his or her regular monthly credit card payments into a "settlement account," which helps them accumulate a lump-sum amount over a certain period of time that can be used to make a settlement offer. From a creditor's perspective, it often makes financial sense to accept a lesser amount, or a reasonable offer from the consumer, rather than "sell off" that same debt to a third-party debt collector, often for as little as 10 cents on the dollar.
Keep in mind, however, that like any debt relief option, debt settlement is certainly not risk-free. As the term "debt settlement" implies, credit card companies are not legally required to "settle" or accept your settlement proposal. In many cases, you will be advised to stop making payments on your credit cards to save up funds, over a period of time that you can later use to make a reasonable settlement offer. While in the process of saving up funds and not making payments, many consumers face the threat of a lawsuit from creditors for, essentially, defaulting on the terms of their credit card agreements. In addition, many consumers who default on the terms of their credit card agreements typically see a decline in their credit scores.
But in spite of the risk involving one's credit, debt settlement remains a popular alternative to bankruptcy - which, as mentioned previously, can have a more serious and longer-lasting effect on your personal credit.
Comparing Your Debt Relief Options
If you are overwhelmed with credit card and unsecured debts, there is generally no need to panic or resort to more drastic options like bankruptcy because you have several debt relief options available. Because every individual's debt situation is different, it is a smart move to compare and contrast all your debt relief options, and do your due diligence when selecting a company to work with. It may also be a good time to reevaluate your spending habits and start making small lifestyle changes - for instance, making more meals at home than going out or streaming movies rather than going to the theater - that can add up to big savings in the long run.
The bottom line is, there is help available for you if you want to take the next step in regaining control of your finances. Make the smart move and request a free debt relief estimate and savings analysis - today.