There are times in everyone’s lives when a change or extra help can make the difference between success and failure. Repaying a loan is just the kind of change that millions of Americans are looking to make possible each day.
Unfortunately, repaying a loan can be a slow and taxing process, costing consumers much more in the long run. Getting relief from overdue or high-interest loans creates financial room to breathe and affords time to reflect and plan for the next steps. Whether looking for payday loan debt relief or assistance for other outstanding debts, consumers have options for setting a new course for their future.
How Do Debt Relief Programs Work?
Consumer debt is a common problem for many. U.S. debt averages just under $100k per person, with almost 80% of Americans reporting an outstanding debt amount they’re working to pay back.
A debt relief program can exist in different forms but essentially works to help the consumer pay back the loan without being smothered by the interest. Usually involving a third-party company, another institution can buy the debt, and the payments are restructured or refinanced to assist the consumer.
Each consumer’s loan situation will dictate the specific approach which works for them. Look for reputable and experienced companies that can comprehensively explain consumer repayment options.
The Most Important Advantages of Debt Consolidation
Managing an outstanding loan or debt can create several advantages for consumers. Most importantly, it gives consumer control and guidance over their finances.
Consolidate Debt to Save Money
When a person repays a loan with a high-interest rate, much of their repayments pay the monthly interest instead of the principal loan amount. This financial wheel spinning keeps a consumer from moving forward.
Debt consolidation programs help customers gain traction and pay back their debt amounts. Over time, the money saved on lower interest payments adds up. Once the debt is repaid, there are even more savings to add to the monthly budget.
Fewer Monthly Bills will Streamline Your Finances
Some consumers are facing multiple repayment scenarios with different lenders or financial institutions. Having so many bills to pay each month can become confusing and expensive if a payment is missed.
With debt consolidation, there are options for reducing multiple payments to one bill. Debt relief means fewer repayments to keep track of and only one bill and interest amount to plan for each month.
Ability to Pay Off Debt More Quickly
Fewer bills, bill amounts which can be reasonably handled monthly, and interest rates which don’t swallow up the payment amounts all help to reduce the total amount of time spent on repayment.
Paying off debts faster is necessary for moving forward in life and developing more financial independence. Just the thought of repaying and ending a debt cycle can be a cathartic process that helps free consumers from stress and anxiety.
Aids in Lowering Your Monthly Payments
Some consumers may be effectively making their monthly payment schedules as is, but a consolidation or relief may reduce the payments, effectively freeing up some additional monthly finances.
Other consumers can struggle to make the payments and see debt relief as their best option to keep from going under, either financially or emotionally. Reducing monthly payments is the pressure release needed to keep going strong.
Helps in Improving Your Credit Score
Another critical aspect of successful debt repayment is improving a credit score. Credit scores often improve as payments are made in full and on time.
For consumers who may have lost points towards their overall credit score, possibly triggered by their debt, a repayment schedule works for them on many fronts.
What are the Options Available for Debt Reduction?
Whether looking to pay back a sizable loan, or the end of medical debt, there are a few options for repayment. Start by identifying current debt amounts and assessing what is most critical to pay back first.
Stay with Minimum Monthly Payments
Although not technically a change, maintaining consistent payments can work for many. If the interest and fees aren’t too steep, a regular monthly instalment can pay off a loan effectively. The trick is never to miss a payment.
The biggest concern is making sure the consumer can make the payments in the long term. Defaulting on a loan or debt repayment can cause substantially more significant financial problems.
Credit Counseling or Debt Management
Designed to work with consumers as a third-party intermediary between them and their creditors, debt counseling or management programs help to organize or restructure debt repayments. Often, the consumer receives an amended debt amount to pay to the credit/debt counseling company, which then pays the original creditors.
These programs usually don’t discriminate on credit scores and are often run by non-profit organizations. For many consumers, learning to budget and financial plan are skills that need some help, and these programs try to teach best practices while providing debt relief.
Consolidation takes all outstanding debts and combines them into one monthly payment. A new loan must be taken to pay off this new single debt.
The new debt amount being repaid usually has a lower interest rate than the original debt. The streamlined payment schedule and reduced interest are generally beneficial for shortening the repayment time.
In some cases, a consumer’s current credit score may not allow them to receive a reasonable interest rate.
Another option for debt repayment is a settlement agreement, often reached on behalf of the consumer through a third party. Debt settlement reduces the principal amount owed and the interest rate. Consumers are usually able to adhere to these restructured payments and finish up their debt payments on time.
Still, some creditors will refuse to accept a debt settlement, and some third-party financers may charge hefty fees for the service, so choose wisely.
When all other options seem unavailable or exhausted, filing for bankruptcy can be a giant reset button. Credit scores will suffer, and the ability to receive a loan will most likely be hampered for at least seven years.
Bankruptcy usually signals that the debt is too large even to consider restructuring or repaying, or the person is financially destitute with little to no options for improving their situation. Certain states offer bankruptcy protection for properties such as houses or vehicles. Check here to see what your state may offer.
In some cases, partial or total forgiveness may occur if a person can cite a specific reason or qualify for special programs. These situations are quite rare, though, and should be approached with caution if they sound too good to be true.
Balance Transfer Credit Cards
Lastly, credit cards are designed to shift debt and interest payments to more minor, more manageable payment schedules. Some credit cards will offer zero interest for an initial amount of time. Switching a debt amount to one of these cards may allow a consumer to pay off a substantial amount of the principal amount.
Be aware that the interest rates can rise significantly, once the zero rate period is over. Or if a consumer misses or is late on a payment, the interest rate may go up. Read the fine print carefully for these offers.
Debt Relief: What to Do and What Not to Do
Choosing debt relief, for the most part, is a positive step. Beware of hidden or exorbitant fees or stringent rules, which can make the situation more costly. If a consumer can pay their bills on their own, they should. Avoid any offers that sound too good to be true.
Which Financial Commitments are Eligible for Debt Relief?
Usually speaking, unsecured debts are the best to attempt debt consolidation on. These debts, like credit cards, medical bills, or personal loans, aren’t backed by collateral, so there’s more leeway for repayment.
Secured debt, like auto loans or mortgages, is harder to find relief from. Bankruptcy is one of the few options for these types of debt.
Discover Your Opportunities with Real PDL Help!
Knowing what and who to ask can be daunting. Many consumers who need financial experts may feel exposed due to unpaid or past-due debts. Seeking advice from a top-rated payday loan consolidation and debt management service, Real PDL Help will ease those concerns. Our professionals will explain what will happen before, during, and after the debt relief process, regardless of an individual’s current debt outlook.
Ease Your Debt Today
With Real PDL Help’s assistance, consumers can turn their financial trajectory around and take control of their debts. Contact us today and see how we can help to transform lives.