If you have debt that you seem to not be able to pay off and cannot see yourself being able to pay off on your own within the next five years, you may want to regroup with yourself. It may seem like a hopeless situation for many, leading to stress and difficulty living their lives.
However, there are still options for you, even when it seems like a bleak situation. Yes, we are talking about debt relief. In this article, we will talk about two debt relief options—debt management plans and debt settlement. We will discuss their disadvantages and advantages, as well as how they may help or hurt you. If you have debts that are now out of hand, then read on.
However, keep in mind that these do not guarantee that you will clear your debts. At the end of the day, it is still up to you how your debt will be managed. We recommend that you only take the route of debt relief as a last resort.
Debt Management Plans
Debt management plans allow you to pay credit card debts fully, but with waived fees or reduced interest rates. This works by you paying to a credit counselling agency each month, and they distribute your payments to all your creditors. Think of it as having a manager for your money.
Credit counsellors have this capability because they often have agreements with credit card companies. This allows them to do this for you—for their own fee, of course. Keep in mind that your credit cards will remain closed until you are able to pay off these debts. And even then, there is no guarantee that you will be able to apply again.
It is also important that you ensure that you are working with a legitimate credit counselling agency. Some may be sleazy or will try to even scam you of what little money you may have left.
This option is not recommended and is suggested as a last resort. What this is basically getting your creditors to accept that you can only pay a small amount and for them to take it and write off your debt.
With this option, you work with debt settlement companies who encourage you to stop paying your debts and put money in an account with them. They will then approach the creditors for you to negotiate with the lump sum as you become even late on payments until they will accept the small lump sum payment and not force you to pay the remaining.
Creditors often accept this in fear that they will not be able to receive anything if they decline the settlement. They would rather get a smaller amount than pursue you for the total amount and not get anything at all.
However, this is not recommended because you will be getting collection calls, penalty fees, and possibly legal action filed against you. Throughout the negotiation process, all of this will continue and this does not also guarantee that creditors will settle.
If you have unpaid debt, do not be afraid as you have different options. There are different companies that will be glad to help you out, and not all hope is lost. We wish you the best of luck!
For debt relief help or options on the best personal loans, we at Get Approved Canada will be glad to help you. We understand that we may have financial difficulties or needs at times, so we have made it easier for you to apply for loans that accommodate your needs. Get in touch with us today for the best loan options.