Debt Relief And How The Industry Gets People Out Of Debt.
It is tough today, certainly as tough as it has been in living memory. For many there is the ever increasing problem of debt and it drags them down with higher and higher repayment schedules.
This is why the debt relief industry exists. At it's best it can save people from bankruptcy and transform lives. At it's worst, it is companies preying on desperate individuals to bleed them of what little they have left to give.
The intention of this piece is to run through how the industry can help and some of the potential pitfalls.
There are two main types of relief or debt management programs. The first is debt consolidation, this is when you effectively borrow another amount of money, enough to cover all the monies owed. This second loan is at a much lower interest rate and will result in just one monthly payment.
The advantages are, that all the current payments can be consolidated into one low monthly payment that you can afford. However, the amount someone actually owes will increase, because there are hefty consolidation fees to be paid. Also it takes a very long time to pay off.
A big stumbling block preventing people from getting these types of loans is that you will have to put up collateral as security to be accepted into a program. Most in this position cannot do that.
Then there is the debt negotiation route. This differs from consolidation in that a company negotiates on you behalf to secure large discounts on your debts. They use their skills and experience of the industry, to make the companies that are owed money understand that this is the best route for them and you.
This can make massive difference to someone's situation, sometimes there are reductions of 80% or more. of course this depends on individual circumstances, but it does means that people can get out of debt very quickly. A disadvantage is that is can have a bad effect on credit ratings.
One important point to consider with debt negotiation is that, you should only ever think of considering companies that charge based on what they can save you.
This is why the debt relief industry exists. At it's best it can save people from bankruptcy and transform lives. At it's worst, it is companies preying on desperate individuals to bleed them of what little they have left to give.
The intention of this piece is to run through how the industry can help and some of the potential pitfalls.
There are two main types of relief or debt management programs. The first is debt consolidation, this is when you effectively borrow another amount of money, enough to cover all the monies owed. This second loan is at a much lower interest rate and will result in just one monthly payment.
The advantages are, that all the current payments can be consolidated into one low monthly payment that you can afford. However, the amount someone actually owes will increase, because there are hefty consolidation fees to be paid. Also it takes a very long time to pay off.
A big stumbling block preventing people from getting these types of loans is that you will have to put up collateral as security to be accepted into a program. Most in this position cannot do that.
Then there is the debt negotiation route. This differs from consolidation in that a company negotiates on you behalf to secure large discounts on your debts. They use their skills and experience of the industry, to make the companies that are owed money understand that this is the best route for them and you.
This can make massive difference to someone's situation, sometimes there are reductions of 80% or more. of course this depends on individual circumstances, but it does means that people can get out of debt very quickly. A disadvantage is that is can have a bad effect on credit ratings.
One important point to consider with debt negotiation is that, you should only ever think of considering companies that charge based on what they can save you.
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