Will Debt Settlement or Debt Negotiation Help?
Many people in Arkansas who feel saddled with high-balance, high interest credit cards may be looking for a reasonable alternative to bankruptcy. A debt settlement or debt negotiation program may help them avoid personal bankruptcy and settle debts for less than the full amount owed. Debt settlement, through a debt negotiator, involves asking individual creditors to agree to "settle" their debts for much less than the full amount owed.
How Does Debt Settlement Work?
Typically, the process of debt settlement involves asking consumers in distress to stop paying high interest credit card minimums. Instead, those minimum payments are "set aside" over a certain period of time to be used for the purpose of extending a debt settlement offer, through a debt negotiator, to a credit card company. It makes sense that a credit card company, faced with the chance of possibly "selling off" bad debt for as little as 10 cents on the dollar might be willing to accept a negotiated settlement offer from a consumer truly experiencing a financial hardship. While debt settlement can potentially reduce the amount of someones debt and be a positive alternative to bankruptcy, it is an aggressive form of debt relief whose drawbacks should be recognized from the start.
One such drawback: Creditors can threaten or take legal action when consumers stop paying cards according to the terms of their agreements. In addition, the money that is saved by settling for substantially less is subject to taxation. Lastly, debt settlement will typically impact your personal credit negatively, but the impact will not be as severe or long lasting as personal bankruptcy.
If you are in need of debt relief assistance due to high interest, high balance credit cards cards and other unsecured debts, learn more about your debt relief options and get a free debt relief analysis and savings estimate - at no obligation.
Financial Assistance from the State of Arkansas
Debt relief programs have been known to help many Americans during financially challenging times, but some consumers may need more immediate relief, such as help paying for rent, utilities, child care or even buying groceries. The state of Arkansas has a variety of financial assistance programs available, such as the Low Income Home Energy Assistance Program (LIHEAP), Medicaid, ARKids First! Program, which provides affordable health insurance for children, and a variety of food assistance programs. To learn more, visit the state of Arkansas' official Benefits page.
Debt Consolidation Through Debt Management Plans
A debt management plan is another debt relief option for consumers who want to combine or consolidate their high interest credit cards and other unsecured debts into a single, more manageable and predictable monthly payment. The objective of a personalized debt consolidation or debt management program (DMP) coordinated by a credit counselor or debt counselor is to help consumers save a substantial amount of money and simultaneously get out of debt fairly quickly by taking advantage of the benefits of debt relief, such as lower interest rates and the waiving of late fees and penalties.
Prior to customizing a DMP to fit a consumer's needs, a credit counselor or debt relief specialist will interview them in order to gain a clear understanding of their debts. Then they will conduct a budget analysis to find out how much money can be realistically allocated each month to pay down those debts. Based on this information, they will come up with a game plan (a debt management plan or DMP) and send proposals to each of the consumer's creditors requesting the benefits of debt relief for the individual or family experiencing financial hardship. These benefits typically include a waiving of late fees, lower interest rates and penalties, and more favorable, more affordable repayment terms. Those creditors who agree to the proposals are then added to the debt management plan; those that do not accept the proposals must still get paid by consumers according to the terms of their original cardholder agreements.
Debt consolidation or debt management plans can typically be very effective and save consumers a lot of money, but only if they stop accumulating credit card debt and start the process of paying down the principal amount of debt on time, at a lower interest rate, month after month. The concept is simple in theory: Stop using credit cards; start paying down existing principal debt on time, month after month, at a lower interest rate; and fulfill the program as scheduled. Then, celebrate your hard-earned financial freedom.
Could a debt consolidation or debt management plan help you resolve debts faster, and how much could you save? Find out by requesting Your Free Debt Relief Evaluation and Savings Estimate.