If you or a loved one is struggling with debt, know that you’re not alone- Freedom Financial Asset Management has found that, between student loan debt, medical debt, credit card debt, and car loans, most Americans are carrying along some kind of debt with them. If you are in the majority of American consumers that find themselves stuck with the same debt year after year, you’ve probably considered investing in some form of debt relief strategy. But with so many options out there, what is the best choice for you? If you’re feeling overwhelmed by your debt and aren’t sure what to do, don’t worry- Freedom Financial Asset Management has got your back. We’ve taken the time to narrow down the top three debt relief strategies for you so you can decide which option is the most beneficial for your unique situation.
- Credit counseling. When you undergo credit counseling, you’ll speak with a professional debt management company to set up a payment schedule that works with your financial situation. While there are a few nonprofit options, most credit counseling agencies are for-profit. Credit counseling companies are usually able to negotiate a lower interest rate for your debt so long as you stick to your repayment schedule by working with the source of your loans.
While you’ll probably be relieved at the credit companies giving you a break (Freedom Financial Asset Management has found that most will stop calling so long as you remain on track), undergoing credit counseling can have the potential to damage your credit profile the fees can be expensive. Credit counseling can be a good option if you need a lower interest rate and you can resist the urge to incur additional debt.
- Debt negotiation. Debt negotiation companies work directly with the company that has issued you your unsecured loan in order to negotiate a lowered debt settlement. Instead of paying your creditor directly, you will continue to make payments that are held in a separate account while your debt negotiation company works to lower the amount that you owe; when an agreement is reached, the funds you’ve paid into the account go towards ending your debt obligation.
While you’re undergoing debt negotiation, your creditors will likely continue to contact you, and may even seek legal action. Your credit score will be negatively impacted, as you are not technically making payments to your creditors during the negotiation period. However, debt negation is usually a highly effective strategy for reducing and eventually getting out of debt- Freedom Financial Asset Management has found that most people are able to get out of debt in anywhere from two to four years. If you are able to commit to a longer debt relief process and cannot currently make your minimum payments, you may benefit from speaking with a debt negotiation company.
- Debt consolidation. Debt consolidation is the process of taking debts on a number of accounts and combining them into one account to be paid down. You may be able to undertake this on your own through balance transfers, or you can work with a debt consolidation company who will take care of combining multiple accounts for a predetermined fee.
Interest rates on debt consolidation accounts are typically the lowest of these debt relief strategies, and debt consolidation offers you a predictable and manageable monthly payment to anticipate each time bills are due. However, if you hay poor credit or no credit, debt consolidation may not be an option for you, as most balance transfers require a minimum credit score to obtain. Debt consolidation is a good option for those who have the discipline to pay down their accounts in a set period of time, and who have okay to good credit already.
If you’re having trouble paying down your debt, don’t be afraid to ask for help. Freedom Financial Asset Management is here to help you regain your financial health, and may be able to help you pay down debts and improve your credit score. Contact us today, and get started on the way to a more stress-free financial future.