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The Road to Your Financial Freedom: Debt Relief Options

Achieving financial freedom requires a lot of work. The sense of relief of not having to pay for, or settle certain bills is incomparable. Financial freedom means you can make specific life decisions without necessarily having to stress yourself about the impact. This does not only mean you are financially capable but that you are in charge of your finances. This is where debt relief options come in.

Your Road to Financial Freedom

The road to financial independence is never a ‘get-rich-quick’ route. In simple terms, it means you can manage your money properly, clean up your finances, be smart about your choice of career, be able to create a strategy for savings in the short period, and can drive yourself to learn about investment options.

The part that requires cleaning up your finances creates some sense of awareness about how irresponsible with your finances you have been in the past. That is, you are serious about kicking your debt and loans into the curb. According to a survey by debt.org, in 2018 the number of Americans in debt reached 300 million people. Many respondents prefer not to have debt, but the number of debtors is constantly increasing because in case of a critical need of money an emergency loan or any other kind of loan is a very handy solution.

Man facing financial difficulties

In this way, it is equally important to talk about debt relief and the available options.

Debt Relief

Ideally, people suffering one or more financial troubles as a result of mounting debt have only one way out. The right decision must, however, be made with determination to ensure that any debt relief option they choose is completed. How do you start? Make sure you have a budget plan. If needed, hire a financial expert to help out. That way, you will be able to remove the basic necessity expenses from your income to determine the amount you can afford to settle your debts. Call this your debt payment fund.

There are financial experts or credit counselors who can advise on the available options that are agreeable to you, and acceptable to your creditor. To choose the best debt relief option, you might be required to apply due diligence.

Debt Relief Options

Primarily, there are five available options you can select from. These will give you a debt-free life but have diverse effects on your finances, and credit history. For that reason, you need to act with caution.

Pay the Monthly Balance

This is the most obvious option and the least complicated. Typically, it requires paying off your debt on a monthly basis, and the aim is to pay off the minimum payment at least. To achieve success with this, it is recommended that you strive to pay more than the amount so you can complete the payment.

One advantage of this option is that it relieves you of any form of the burden of late payment fees and ridiculously high-interest rates. Besides, when you pay on time, it saves your credit score of being hit. To increase your paying ability, you can check your budget plan to determine if your debt payment fund is sufficient to take care of the minimum payment requirements.

Debt Settlement

This is an increasingly popular option. It involves relieving your debts via the help of a debt relief agency or company. These will negotiate and attempt to get the creditor to agree to a lower amount to be paid. This is often expressed as a percentage of the original balance. Once you have completely paid off the debt, the remaining of the debt will be relieved. Meanwhile, this begins with an analysis of your financial capabilities.

The key to success here is to hire and leverage the expertise and negotiating skills of an expert.

Consolidation Loans

Debt consolidation is another method of debt relief, where you put all your debts in a single debt consolidation loan, so you pay for just one of them. The goal is to take away the high-interest debts and maintain just a payment every month. The home equity loan is the most popular of this method, where you put your home on the line.

Its an advantage over others since you can manage your debts easily and effectively while focusing on one payment. Your credit score would be considered here as well, but it doesn’t matter when you’re applying for instant loans with a simple application process and fast approval.

Managing Debt

Debt management is known as credit counseling. All you have to do is enroll in a program that provides necessary professional debt counseling. It is similar to the debt settlement method, but here, the funds are handled by the debt management firm.

They consolidate your debt and pay your creditors off on your behalf, while they take the payments from the account which you must fund. Not only that, but they also mediate in terms of lowering the interest rate, monthly payments, and the outstanding balance by speaking with your creditors. Meanwhile, this will impact your credit report because you might find it lower than before.

Bankruptcy

This is the last option desired by debtors, creditors, and financial experts. Here, you are declared unable to pay your debts, and a bankruptcy court is involved. This option puts your assets in danger of being taken from you by your creditors. Bankruptcy as a debt relief method can have an unfavorable effect on your credit report, score, and history. It makes your chances of getting a traditional financial aid very difficult. In this case rely on guaranteed approval loans, which remain the same accessible to you.

Pros and Cons of Debt Relief Options

In case you are floundering financially, and do not know exactly how to manage the rising debt obligations, the following are the pros and cons.

Pros:

  1. Free credit counseling sessions are offered by most nonprofit organizations.
  2. Lower interest rates and monthly payments.
  3. Reduced amount of debt.
  4. A chance to start over.

Cons:

  1. Many of the options require a time frame of 3-5 years.
  2. Fees for services.
  3. No guarantees.
  4. Late fees and many other penalties.

The Final Insights

When handled responsibly, debt relief can be a driving force to great investments in homes and education, which serves as a key economic engine. It is important that you have taken note of all the consequences. When you pay off your debt, you can lay a foundation to create long-lasting wealth. Staying debt-free is a great way to ascertain and enjoy some financial freedom.

References and Sources

1. Debt Consolidation Loans. Retrieved from https://loans.usnews.com/debt-consolidation

2. About Bankruptcy. Retrieved from https://www.uscourts.gov/services-forms/bankruptcy

3. Can I Settle a Debt for Less than I Owe? Retrieved from https://www.debt.org/settlement/

4. 5 Reasons Debt Relief Programs Cause More Pain Than Relief. Retrieved from https://www.forbes.com/sites/lizfrazierpeck/2018/03/19/five-reasons-debt-relief-programs-cause-more-pain-than-relief/

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