If you are struggling to manage your debt but are still determining what steps to take, you can look to the solutions offered by americor funding debt consolidation companies. This solution is a challenging fix. Many of these paths negatively impact your credit score, require long-term dedication, and force you to keep paying most of your debt. The debt consolidation company contacts your debtor to negotiate a lower rate on your behalf.
While credit companies are not obligated to negotiate your payments, the best debt consolidation companies can consolidate your debt into one monthly payment or negotiate to lower the total amount you owe. See our article on debt consolidation to learn more about the best debt consolidation loans and credit management options.
What are your options? Debt Management Options You can get a lot of mixed messages from people in the debt relief industry. Since there is no general industry consensus on the best choice, we’ve narrowed down your choices. Many of these options work together or as part of a larger debt reduction program. Still, these are your options:
Settlement is negotiating with your creditor to reduce the total amount you owe. While you can do this yourself, many people hire a professional debt settlement company or attorney to negotiate on their behalf. Once this process begins, funds are backed up monthly in a segregated, insured account.
As you collect your funds, the company or attorney you choose negotiates with your creditors to lower the total amount you owe. When a settlement is reached, the funds you have set aside are used to pay off your creditors and negotiation costs.
Debt consolidation combines all of your debts into one lower payment. Take out a loan to pay off your creditors. Companies will often try to reduce your debt by paying off debt before recommending that you take out a loan.
Debt Management Program:
These programs often go hand in hand with a Credit Counseling Program. During this program, you receive financial counseling and meet with a financial advisor. In addition, the company running your debt management program contacts your lender and tries to negotiate a lower interest rate on your behalf. Lower interest rates allow you to pay off debt faster. This debt relief program does not negatively impact your creditors, but it may limit your credit options for the duration of the program.
It should be seen as a last resort as it will negatively affect your credit for years. With bankruptcy, you officially declare that you cannot pay your debts. To pursue bankruptcy, you must qualify and complete the entire process, including pre-filing and post-filing counseling.
Debt has less risk than other options, such as bankruptcy, but carries considerable risk. When you take out a consolidation loan, you are required to post collateral. Most of the time, the collateral needed is a second mortgage or a home equity line of credit. It is risky because your house is at stake if you can’t make your payments. Also, debt consolidation loans can come with high-interest rates if you have bad credit. In addition to risking their homes, many consumers continue their debt.
Types of debt vary, and it affects what you can consolidate. The first thing to determine is whether your debt is guaranteed or not. Secured debt is a type of debt secured by collateral, which includes things like your mortgage and car loan. Unsecured debt is a loan or line of credit without any collateral attached, including credit cards and medical bills. Other options, such as student loan consolidation, can vary depending on the consolidation company you use. Certain unsecured debts, such as student loans or payday loans, may not qualify for consolidation. Before signing up with a company, explore your options with a financial consultant so you know exactly what debts you can and can’t consolidate.