Today, most of the families and individuals carry a huge amount of debt. There are a lot of reasons that might lead you to fall into debts. It might be due to you being unemployed, or there is a shrink in your income or your expenses are just mounting up.
It’s quite normal to experience financial ups and downs in life, but the problem arises when people just try to ignore the situation and hope that things would get better on their own. Sometimes, problems do settle on their own. However, when you are struggling with excessive debts, it’s not a good strategy to just let the things settle on their own.
Being in debt is an extremely stressful situation. When the amount you owe rises to such an extent that you are left with no hope to repay it, or when the state tax authorities are running after you for the repayment of debts, you may feel enormous debt pressure. Such a situation may result in sleepless nights, damaged relations and a lot of frustration. However, you can get a peace of mind with a debt relief program.
Debt Relief Options
Thankfully, there a certain options to help you deal with the increasing level of debts and come out of the financial crisis.
It’s important to show documents to prove that your claim is not baseless and you are truly in hard times.
If you happen to successfully convince your creditors about your situation, you can then have discussions with them about the possible ways for meeting your debt obligations. There are four popular options that you are likely to discuss with your creditors. The first one, having your present interest rate reduced. Say for example, if your present interest rate is 20% or higher, you could get it reduced to 18%. This would help you in lowering your monthly payments. The second option could be discussing the timeout period, of about three to four months. During this period, you will no longer be making payments. Instead, you can reorganize your finances and save a good amount of money for the payments. The third option could be converting your credit card debts into repayment programs.
The last option is debt settlement. This is where you agree to make lump sum payment to settle down your debts but for a lesser amount than you actually owe.
If the creditors give a nod to the debt management plan, you would then deposit your monthly payments with the credit counseling organization. The credit counseling agency shall make payments to your creditors according terms of DMP. It nearly takes around five years to complete your DMP. Also, you will have to give away all the credit cards that are included in your plan. You cannot apply for an additional credit unless your plan is successfully completed.
The advantage of going ahead with DMP is that the creditors may reduce your interest rates and waive away certain penalty charges as well. Your monthly payments will most likely get reduced and you will no longer be chased by your creditors.