Owing a large amount of money is stressful, especially if you can't afford the monthly payments on your debt. However, programs are available for consumers that can help lower both interest rates and monthly payments, making it easier to be debt-free than ever before. Choosing the right program may seem like a daunting task. Know the facts about the different types can help.
NonProfit Debt Assistance
A nonprofit consumer credit counseling company can help you with your debt. Companies such as American Consumer Credit or the National Foundation for Credit Counseling provide counseling, education and debt management programs that can assist you with reducing your debt. They work with the credit card companies to lower your interest rates, sometimes down to 0 percent, and can enroll you in a program that can get you out of debt within a couple of years. You will be required to close all your credit cards, but because your monthly payments will be lower, you will have extra money for other bills.
Debt Settlement
The aim of debt settlement is negotiating your debts down considerably, with some companies accepting just 30 percent to 70 percent of the total owed. You will pay money each month into an escrow account rather than paying your creditors. However, most of these companies charge considerable fees to negotiate the amount of your debt, and they can't guarantee that your creditors won't sue you. If you go this route, ask about fees, how many years it may take, tax ramifications and other terms and conditions.
Bank Hardship Programs
If you are struggling to pay your bills, you can contact your creditor to find out if the company offers a debt hardship program. Many times the bank's collection department will contact you when you've missed payments and will provide the information about this type of debt program. Similar to a debt management program, your rates and payments may be lowered temporarily or even permanently until you've paid off the account.
New Affordable Mortgage Programs
If you own a home and are having difficulties making your mortgage payments, you may qualify for a Home Affordable Modification Program (HAMP). You may qualify for a reduction if you occupy your house as your primary residence, your monthly mortgage payment is greater than 31 percent of your monthly gross (before tax) income, your loan amount does not exceed $729,750, and you are unable to afford your current payment. Contact your lender to see if you qualify.
Bankruptcy
Talk with a lawyer to see if you qualify to claim bankruptcy. This should be a last resort and only done when you are unable to make payments to your creditors, even on a debt management program. There are different ways to file, and you may have to sell property to pay for debts owed, or you might have the option to set up a payment program that allows you to make payments over time. Because bankruptcy has a negative impact on your credit history, seek this option only when there is nothing else available.
0 comments:
Post a Comment