Debt is something that far too many people struggle with. Spending money you don’t really have is easy. It’s when you need to pay off the money that you borrowed that many people run into some difficulties.
If you’ve found that your debt has gotten out of control, you may be considering debt relief services. While debt relief can be the right decision for many individuals, you need to balance the pros and cons and truly understand what debt relief means.
Pros of Debt Relief
There are many different components of debt relief, which means there are many different benefits of going through the debt relief process. The largest pro of getting relief from your debt is that you no longer need to pay off the money that you owe. You may also be able to pay off your debt but in lower, more manageable payments.
The actual benefits each individual will experience will depend on the kind of debt relief they undergo. If you are looking to have your debt negotiated, you will come to an agreement with your creditors that allows you to pay a different amount back. If you can negotiate your debt without filing for bankruptcy, you will typically experience fewer consequences on your credit score.
Another form of debt relief you may use is known as credit counseling. Through credit counseling, you will have an advisor helping you pay off your debt in a more manageable way. Credit counseling will provide you with a process of paying off your debt while keeping creditors off your back.
Finally, the last kind of debt relief we will discuss is known as debt consolidation. When you consolidate your debt, you are putting all the money you owe into one place. Balance transfers, home equity loans, or even personal loans are all ways that you can consolidate your debt into one place. With debt consolidation, you are only required to make one payment each month with one interest rate.
When you just look at the pros, you may be wondering why debt relief may not be the right choice for you and your situation. However, debt relief does have some downfalls as well.
Cons of Debt Relief
If you find that you’re unable to pay your debts, you won’t be able to find a debt relief plan that doesn’t have a few consequences or drawbacks. However, if you’re seriously struggling to find cash to pay what you owe, they may be well worth it.
First, debt relief does not usually protect you from creditors taking legal action against you. While bankruptcy can stop them from collecting their debts, debt relief does not provide you with the same layer of protection.
Debt relief programs can also become expensive. When you’re already struggling to pay off your debt, finding the money for a debt relief program like credit counseling can be a struggle. Depending on the kind of debt relief you select, you may also be required to pay off the entirety of your debt.
Debt relief can also hurt your credit score. Because you are admitting that you borrowed and spent too much money, this may push creditors away from allowing you to borrow money for them again. However, the sooner you can wipe away the debt you can’t afford, the sooner you can begin repairing the damage.
Finally, debt relief is not always available to everyone. If your credit score is too low or the debt is too high, you may not qualify for certain debt relief programs. Debt relief programs also may not guarantee you’re in a better situation. If you have too much debt, even lower monthly payments may be a struggle to maintain.
Debt relief isn’t the best choice for everyone but it has helped many people get back on their feet financially. If you’re struggling to pay back money that you’ve borrowed, a debt relief procedure can help eliminate some of the financial responsibility that is holding you back. Before you many any decisions, be sure you know all the pros and cons of debt relief and what it could mean for your future.