Best Debt Relief Programs in 2022
Taking out a loan imposes a particular list of obligations on the borrower. Everyone should be aware of this elementary responsibility. The violation of the terms of the agreement can lead to significant financial difficulties.
Practically every person who takes a loan runs the risk of being sanctioned by the creditor. However, no one is immune from situations when there is simply nothing to repay unsecured debt. It is obvious that after the delay in the monthly payment and the end of a certain period, sanctions in the form of interest will be imposed on the borrower.
Accordingly, the debt will only increase, thereby driving the borrower even deeper into the financial hole.
However, there are no hopeless situations, and similar cases also have a solution. It is possible to contact a debt settlement company and use one of the available debt relief programs. Read more about the best debt relief companies below.
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Debt Relief Companies: Best Offers
Cooperation with tax debt relief providers is appropriate in case of inability to cope with debt obligations. A highly qualified credit counselor knows how to negotiate with creditors. He also knows how to write debt settlement letters and what debt management plans to use to save you from debt collection calls.
There are a fairly large number of nonprofit credit counseling agencies today. The most trustworthy include CutMyDebt, CuraDebt, Tally, Accredited Debt Relief, DMB Financial, and New Era Debt Solutions. Brief information about each is provided below. Carefully study it, and you will be able to decide on the choice of the most suitable debt settlement company.
CutMyDebt rightfully takes first place in our rating. It is a leader in the debt relief industry. Unlike most debt settlement companies, its fees are affordable and make up approximately 15% of the total debt. Only those with a debt consolidation loan amount greater than $10,000 can apply for the debt management program. Requirements for applicants directly depend on the chosen debt relief provider.
Debt relief programs are varied. The service works with a variety of types of loans. These include business debt, credit card debt, personal loan debt, divorce debt, medical debt, etc. So, be sure you can get help with your monthly payments in any case. The main thing is to provide proof of identity, documents about your credit score, and taxable income.
The advantage of CutMyDebt, among other best debt relief companies, is a simple and understandable interface and a wide variety of debt relief services (debt consolidation, debt settlement, debt management, etc.). There also are no upfront fees.
However, customers note that the service does not always provide round-the-clock support. Sometimes you need to wait one business day to get an answer to an important question.
CuraDebt is the second trusted place to apply for debt consolidation programs. This is a debt consolidation agency with many years of experience. Founded in 2000, it has helped a large number of debtors solve their financial problems. You can apply there to consolidate debt if your total unsecured loan is $5,000. No administrative fee is required. Interest rates are around 20% of the total debt.
Like many other top debt relief companies, CuraDebt provides its clients with free debt counseling. Its result is finding a solution to facilitate unsecured personal loans.
CuraDebt has an A+ rating from the BBB, which indicates high-quality services and effective customer support. In addition, the service is certified by the American Fair Credit Council and the International Association of Professional Debt Arbitrators.
The main benefits of CuraDebt are:
- The best credit counselors;
- Effective debt counseling;
- Minimum documents (identity confirmation, credit history, taxable income statement, etc.);
- Low fees;
- Servicing various types of loans, including federal student loans, tax debts, medical bills, consolidation loans, etc.
CuraDebt disadvantages include the following:
- Absence of a mobile application. It usually allows automating the process of applying for participation in the debt management program or debt forgiveness;
- Debt settlement services are not available in all states of America.
Tally is one of the most popular debt relief companies in the US today. It specializes in providing debt consolidation services across multiple credit cards. Credit consolidation involves combining all the client’s loans in one bank account. After such an operation, a reduced interest on the loan is usually issued. Debt consolidation is often used in debt restructuring.
If you have credit card debt and would like to use the Tally service, you should apply online using the mobile app, which is available for a fee. The cost is $300 per year or $25 per month. The company has quite clear requirements for applicants. The credit score must be 580. Credit line amount: $2,000-$25,000. APRs are 7.90%-29.99%.
It is also important to provide proof of your monthly income and proof of identity. After this, the specialist will start negotiations with creditors regarding your debt payments.
Users point out that Tally’s drawback is that it reports payments to major credit bureaus. However, there are many more advantages. These are soft credit checks, various debt consolidation programs, automatic credit card debt relief, etc.
Accredited Debt Relief
Many people choose Accredited Debt Relief over other credit counseling agencies for one of the obvious reasons. It works on a performance-based scheme. Therefore, a debt management plan in a large number of cases turns out to be effective. This scheme involves paying the company’s rate only if credit counselors successfully negotiate with creditors, and the debt settlement process ends with a decrease in tax debt.
The cost of freedom debt relief services is approximately 15%-25% of the total amount of unsecured debt. The debt itself can be $10,000 or more. Services are available in most states of America. However, some documents are required to apply for debt forgiveness. The applicant’s credit score is also taken into account.
The advantage of Accredited Debt Relief is that it cooperates with qualified specialists who can effectively negotiate minimum monthly payments with debt collectors. Therefore, in most cases, borrowers’ financial problems are resolved quickly and efficiently.
DMB Financial is a popular debt consolidation company based in Massachusetts. Over the period of its operation, the company has helped more than 30,000 clients and managed $800 million in debt. Like the other debt relief companies described above, DMB Financial has a BBB A+ rating, IAPDA, and AFCC certification. Clients appreciate the company for its individual approach to each applicant.
The biggest advantage of DMB Financial is that the client portal allows real-time tracking of debt settlement progress. The disadvantage is that this tax debt relief company does not disclose its rates upfront. Therefore, it is not always clear whether applying for public service loan forgiveness is profitable there.
New Era Debt Solutions
New Era Debt Solutions is another reliable national debt relief company with a variety of debt relief options. It started its activity in 1999 and, during this period, was able to settle a debt of $ 200 million.
In comparison with other debt relief companies, New Era Debt Solutions is distinguished by the high transparency of the conditions and the effectiveness of its debt relief program. Fees are low. There are no upfront fees. Debt consolidation services can be used by those with $10,000 or more debt. The application process is simple and takes only a few minutes.
The disadvantage of the service is that debt consolidation programs operate only in 22 states of America. You can view the full list on the company’s website. If your site is not on the list, you are unlikely to be able to get help from the credit consultants of this agency.
What Is Debt Relief?
Debt relief refers to convenient financial instruments that help settle the situation with the borrower’s debt. This way of solving the financial problem involves easing certain conditions of the credit agreement for the individual.
Types of Debt Relief
It is worth noting some of the main types of debt relief:
- Change in debt repayment terms;
- Cancellation of fines;
- Lowering the credit rate;
- Postponement of debt payment;
- Write-off of debt or its part;
- Continuation of the credit agreement;
- Reduction of the single monthly payment.
Of course, this is only a general description of the freedom debt relief procedure. Ways of providing help may differ depending on the specific case of debt.
Debt Settlement Companies: How Does Debt Relief Work?
To get freedom debt relief, the borrower must have good reasons for this and apply to one of the debt settlement companies with a written application. A written application should include the reasons and provides their confirmation. Such an application guarantees consideration and increases the likelihood of a positive decision.
The client draws up a scheme for the procedure with a debt settlement company specialist. The right scheme guarantees a reduction in the credit burden on the borrower. Common debt relief methods are:
- Debt consolidation;
- Credit counseling;
- Debt management plans;
- Debt settlement, etc.
Each agency has its own debt settlement programs, determined by internal regulations and capabilities. This allows to offer clients standard procedure schemes and draw up individual procedures suitable for both parties.
After agreeing on the national debt relief scheme, the borrower needs to collect a package of documents confirming his financial condition. This includes:
- Income statement;
- Statement of debts for utilities;
- Property documents, etc.
After the approval of the debt management plan, an additional agreement is drawn up and attached to the main one. Its basis is often the client’s deposit or the fee he must pay for using the service. After that, the borrower begins to pay debt faster under the new scheme, and the old agreements become invalid.
When You Should and Shouldn’t Consider Debt Relief Programs
The main benefit of the credit card debt relief procedure for the borrower is the ability to get out of a difficult financial situation. This does not imply any serious consequences in the form of transferring the debt to collectors or litigation. The disadvantage is that a certain fee is charged for debt relief solutions. In addition, there is no guarantee that negotiations with the creditor will be successful.
You should consider taking part in one of the debt settlement programs if you cannot pay off unsecured debt (medical bills, personal loans, credit cards) within a set period. However, those who can take some measures to reduce their own expenses and thus pay off the debt can refrain from using the debt counseling service.
Another situation in which credit card debt relief should be used is when your total unpaid debt is equal to half or more of your gross income. If the total unpaid debt is less than half of your gross income, you should not use the debt relief service.
Debt Relief Options
Debt relief isn’t a one-size-fits-all solution. The user can choose different options depending on how much he owes and what interest rates he pays. The most popular credit relief options are debt consolidation, credit counseling, debt management plans, and debt settlement. Learn more about each in the sections below.
Financial debt consolidation is the consolidation of multiple credit accounts in order to pay back debt at a reduced interest rate. By choosing to consolidate debt and receive one monthly payment, you will get the following benefits:
- Ease of management and budget planning;
- The debt consolidation loan repayment scheme is developed individually in accordance with the number of small unsecured debts, the estimated time of repayment, and the financial situation of the client;
- Improvement in credit rating as the total number of payments decreases;
- Monthly savings on interest payments and minimization of commission fees for servicing accounts;
- Improvement of the credit report with timely repayment of multiple debts, etc.
An important feature of debt consolidation is taking a larger amount of money, paying off all debts, and directing the rest of the funds to the necessary needs. For example, buying furniture, renovating an apartment, and paying tuition or medical bills. The main requirements for the borrower include the age of 18 years, residence in one of the US states, and the presence of a checking account.
Credit counseling is a strategy consumers use to improve their financial skills, set financial goals, and get out of debt. A credit consultant tries to fit all debts to various credit organizations within one final payment plan and agrees on the possibility of reducing the amount of fines and penalties, as well as interest rates.
If the borrower is able to meet the new repayments, the debt is listed as being paid on time and reported to the credit bureau accordingly.
Debt Management Plans
Debt management plan is another type of national debt relief. It is an agreement between the debtor and the creditor, which discusses the terms of the unpaid debt. It usually refers to the process of personal financing of individuals solving the problem of high consumer debt.
Debt management plans help the debtor reduce overdue debts and regain financial control. This process can provide minimum monthly payments, lower overall interest rates, longer repayment periods, as well an overall reduction in the debt itself.
Practice shows that debt management plans generally do not affect a borrower’s credit rating. However, closing accounts can hurt your credit score.
Debt settlement is a debt free relief practice common in the United States. This is one of the ways how debtors cope with accumulated debts. The debt settlement scheme is as follows. The borrower transfers his overdue debt consolidation loans to the management of the intermediary company. This is how debt relief services are paid.
The intermediary, in turn, contacts the lender and agrees to reduce the interest rate on loan, increase the repayment period, etc.
This practice is beneficial for the borrower in that collectors stop calling him. In addition, he has the opportunity to repay the debt on more favorable terms.
Risks of Debt Relief Programs
Before signing a national debt relief agreement, it is recommended to study all the risks involved. Find out more about this in the table below.
Risks of Debt Free Relief Programs
Damage to your credit
Debt settlement companies often encourage users to stop paying their creditors. This, in turn, can lead to a serious decrease in credit score.
Debt management programs may require money from the user many months or years before his debt is paid off.
No guarantee of successful negotiation with creditors
Lenders are not always willing to negotiate with the user or the debt settlement company. Therefore, there is no guarantee that the debt relief process will be completed successfully.
How Does Debt Relief Affect Your Credit?
Almost every consolidation loan institution studies the borrower’s credit history and checks the credit score. Its imperfection reduces the chances of receiving money in debt.
To have an impeccable credit report and a high credit score, you need to fulfill all obligations under credit agreements on time and regularly pay the specified amount to repay the loan. If you do not do this and use a debt settlement program, your credit score will decrease, and your credit history will deteriorate.
However, not all types of debt relief have a negative impact on your credit score. For example, debt consolidation can contribute to its increase. This was discussed in the sections above.
Debt Relief Through Bankruptcy
If you decide to get rid of debts by initiating bankruptcy proceedings, think about qualified legal assistance. This will allow you to avoid a number of mistakes and wrong decisions in the future. An individual may be declared bankrupt if the total debt amount exceeds the amount of the minimum wage several times.
Bankruptcy helps to get rid of debts that the debtor cannot handle on his own and to solve urgent financial difficulties.
How do I qualify for debt relief?
You can apply for debt relief if your total debt to the creditor is $10,000. It is enough to choose a reliable company, fill out the appropriate application, and provide all the necessary documents.
How can I get out of debt collectors without paying?
You should contact a debt relief company and participate in one of the debt settlement programs.
What are the disadvantages of debt relief?
The main disadvantages of debt relief are high rates and the lack of a guarantee that the negotiations with creditors will be effective.
Are credit card debt relief programs real?
Credit card debt relief programs are real. You can use one of them in case of necessity and reap the benefits.