There aren’t many people, especially in America, who are still strangers to the word debt. We are thrown into the depth of that word right from the beginning when we opt for higher education.
A college degree is supposed to be a stepping stone to a better career, and implicitly more money, but for a long time after, you’re going to be making that money just to give it right back by paying off debt.
After that, life can become credit after credit, debt after debt. And the worst part is, it’s not about wanting luxuries, it’s about the bare necessities: a place to live, medical interventions, and a decent lifestyle.
Taking a look at the statistics in America is extremely worrying. The average adult debt in the United States is $58,604, and 77 percent of American households are drowning in debt of some sort.
The nasty thing about debt is, for the most part, you are paying it. Month after month, you make payment after payment, and yet somehow the balance is never going down, because there is always a catch; a late fee, an over the limit fee, or any other fee that can justify making you pay even more.
But the situation doesn’t have to remain that way. There are multiple solutions that you can take advantage of when it comes to getting out of debt, such as credit card debt consolidation, and, perhaps one of the best and most stigmatized at the same time, debt relief.
Let’s break down debt relief for an easier understanding, shall we?
What is debt relief?
Debt relief is a solution for those who find themselves drowning in debt and not being able to make their minimum payments anymore. The mountain of debt is growing, the paychecks are not covering your spending anymore, and you can feel the gray hairs taking over.
By choosing to opt for a debt relief service, you are allowing debt professionals to use their financial expertise to get you out of a crisis.
In short, debt relief, sometimes known as debt settlement, is the resolution of your debt for less than you owe.
“You’ll be getting out of debt faster and usually cheaper than you could have done on your own.”
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Debunking Debt Relief Myths
Many people will choose to avoid involving a third party in their financial problems. After all, at first, it may seem too good to be true, or just another unnecessary expense.
It is very important to know that getting yourself out of this situation is, of course, a possibility. No organization providing debt relief services will deny that, or try to fool you into thinking they are the only choice.
However, they wouldn’t be honest when they tell you they are the safer option. Of course, you can make a plan by yourself to negotiate with your creditors, but in retrospect, the situation itself can be a sign that you are not that qualified to be handling your own finances.
Being in debt is stressful as it is. Now imagine having to make call after call to creditors, fighting your case, and providing all sorts of documents that can prove your financial difficulties, while still dealing with the fact that at the end of the day, it could be all in vain.
While a DIY solution would be free, it would also be extremely time and energy-consuming. It’s also important to keep in mind that, while yes, you do have to pay for a debt relief program, in the long run, it wouldn’t turn out to be a scam, but a way you saved yourself from spending even more while paying off debt.
How Much Should It Cost To Get Out Of Debt?
First and foremost, it should never cost you your wellbeing and mental health.
Thinking about how to deal with your money problems every single day, for years, can take a toll on both your mental and physical state. The constant stress puts a strain on you, and the sooner you can escape it, the better.
Paying off debt by spending even more may seem counterintuitive. How could spending money help me in a financial crisis, right?
However, that’s the wrong way to look at it. By putting aside and spending some money right away, you can lower the sum that you’ll have to eventually pay your creditors, as well as the number of years you will spend struggling.
It can take up to 45 years of paying off debt to break even, and if you make some calculations of all the fees that will keep building up, you can end up paying back up to 4 times more than what you originally borrowed.
By staying in debt for years, you are not only losing out on things in the present but also jeopardizing your future self. How many of us don’t know older people, whether family or acquaintances, who have found themselves wondering, at 60 or 70 years old, why they haven’t saved up more over their lifetime?
You’re making your monthly payments, spending every last penny on making a dent in your credit that never seems to appear, only to wonder, 40 or 50 years down the line, why you are retired and with no money saved up.
At the end of the day, only you can answer this question. By putting in balance all the stress, anxiety and sleepless nights, you should be able to estimate how much getting out of debt really is worth to you.
Case Study: Going Beyond Debt Relief
As aforementioned, drowning in debt is a very common situation all over the world, especially in America. While sometimes, situations as stressful as this one might make you feel like you’re the only one going through it, the truth is there is a lot to learn by listening to other people’s experiences.
Not only is it educational and a plus of information for your plan of tackling your own debt, but also a boost for your own mental wellbeing: others have gotten out of similar situations, and so will you with the correct tools and knowledge.
In order to truly get a grasp of the inner workings of tackling a financial crisis, we have asked a former National Debt Relief representative some questions about his personal experience with debt relief, and why it was the best option for him.
Adam Tijerina worked with National Debt Relief for over 10 years. He has intimate experience of working with top-rated companies, as well as a personal story of overcoming the hardships of debt.
Q: How did you realize your debt had become a pressing problem?
A: I think the moment I truly realized it was when I couldn’t make the minimum payments anymore. My expenses were higher than my income, and I just wouldn’t be able to pay everything off every month, so the debt would grow, and it was never a never-ending journey.
Q: How did you decide that debt relief was the solution for you?
A: I had done research on all the options up to bankruptcy. I looked into debt settlement, I read different books and I even bought a training course. I went through everything and finally decided that debt relief was the best action for me at the time. Furthermore, I was able to successfully settle my debts with that training.
Q: Can you tell us a bit more about your personal debt relief journey?
A: I had just gotten divorced and had to move back in with my parents. I had two young children, and my daughter had just had unexpected surgery on her arm, so I had to help pay for that. Not only that, but I had student loans that had just come out of deferment, so this meant they’re going to start needing to be paid, while on top of that I got hit with an extra $8,000 tax bill. I just had too many expenses, and eventually, I was forced to miss my first payment. I believe it was seven years of on-time payments before I had missed my first payment.
After that, the debt collectors started calling. I was getting up to 20 or 30 calls a day, it was crazy. Even worse, they also got hold of my parents and my sister as well. It was exhausting, and I had to talk to them, tell them that I wasn’t able to make my payments anymore, which of course I didn’t feel good about.
You become depressed, and the stress never stops. You’re waking up thinking about your debt, about how you can get more money to pay for that debt, and it starts eating at you.
That happened for about four to six months, during which I was able to save up the necessary money, negotiate with them and settle the balances. I believe it was about $43,000 worth of debt, and I was able to settle it for around $13,000.
Taking care of that was a huge relief, a huge burden off my shoulders. The prospect of paying off debt for the next 20 to 30 years, for three, four, or even five times what I originally borrowed, at 20% interest rates, was horrible.
They love to kick you when you’re down by charging higher fees, charging you late fees, over the limit fees. It is a frustrating aspect, but I was able to overcome it with that training process that the National Debt Relief offers.
I came out ahead after six months, and it took me about two years before I was able to rebuild my credit score and be able to move out on my own, and get a house. The light at the end of the tunnel.
Q: Seeing as you are both a professional and someone who has experienced it first-hand, can you tell us how debt relief compares to other options?
A: It’s for people who are going through a financial crisis like I was. It’s not necessarily your first course of action, maybe you first take into consideration credit counseling as an option for you.
But if you’re struggling on minimum payments, don’t want to deal with the rigid plan of credit counseling, and don’t want to turn to bankruptcy, debt relief is definitely your best option. A good amount of people that file for Chapter 13 Bankruptcy are not able to successfully complete it, ending up with ruined credit scores and without the benefit of bankruptcy.
As far as Chapter 7, if you’re someone that qualifies, it will probably help you more in a short period of time. However, bankruptcy sticks with you for seven to ten years, so it is a compromise.
With debt relief, you get to pay less than what you owe, and it’s going to happen ultimately quickly, in 2-4 years compared to decades stuck on a minimum payment plan paying 20% interest charges every year to the credit card companies. Paying a fee of 20-25% of what I owed, versus paying off debt every year to the credit card companies, plus fees, made a lot more financial sense for me.
The 3 Steps to Getting Out Of Debt
Step 1: Analyze The Depth Of Your Problem
Before beginning to address your problem, it’s important to assess the problem.
How has paying off debt been affecting your daily life, your mental health? If you try to take a look into the future, how does it look? Will you still be dealing with the same stress and anxieties?
It takes a true dramatic moment for some people in order to truly understand how big of a concern their debt has become. The case study we presented showcased how a medical crisis can really put things into perspective.
However, you don’t have to wait for something extreme to show you it is time to get your life on the right track. Analyzing your debt realistically can give you a head start in changing your life for the better.
Are you able to make the minimum payments? Is making the minimum payments making a dent in your debt, or does it seem like an ever-growing mountain?
You’ve probably already analyzed your spending habits by now, so that might be the most unnecessary advice any financial guru will give you. By this point, it’s safe to say it’s not your morning coffee breaking the bank.
Moreover, it’s important to do things that can minimize your anxiety and improve your mental health, and most things in this world cost money. Stopping any activity or consuming any food that you enjoy in order to keep paying off debt for 10, 20, or 30 years is not only unsustainable but can put you in an even darker place.
So, look into how bad the problem has gotten. Look at your present, your future, your physical and mental health, and yes, look into your spending habits as well. But don’t look for a way to reduce any source of happiness in your life for a long time.
Instead, consider saving up for a shorter period of time and getting out of this, with the help of a finance professional, much quicker.
Step 2: Learn About The Different Types Of Debt Relief For Getting Out Of Debt
After getting to know your issue, it’s time to start getting to know your options for solving it. By taking a look at the National Debt Relief website, we have compiled a list of options when it comes to debt relief.
1. Self-Payment Initiative
This is your DIY option, if you are convinced that you are the best person to handle this. You will need to present all the data on your finances in order to prove you are indeed in financial hardship, and start calling all your creditors.
Before doing this, it is also important to analyze your own financial situation yourself. Make a plan in order to see exactly how much debt you have and how much you are able to pay off.
This has the advantage of not having to pay off a third party, but also the huge disadvantage that comes with its high possibility of failure.
2. Consumer Credit Counselling
Consumer credit counseling is another alternative. There are numerous consumer credit counseling organizations to choose from, the greatest of which are nonprofits. When you contact one of these companies, whether through a website or in person, a counselor will meet with you for 45 minutes to an hour to discuss your financial situation.
Your counselor may suggest a debt management plan (DMP) depending on the severity of your financial problems. In a nutshell, your counselor will figure out how much you can pay and then negotiate with your creditors on your behalf.
Longer terms or cheaper monthly payments can be negotiated, depending on your ability to make payments. In some situations, your counselor may try to negotiate a lower interest rate for you.
If your creditors accept, instead of paying them individually, you would be sending one payment to your counseling agency, and they will distribute the money.
The most significant disadvantage of one of these strategies is that it usually takes five years to execute. You’ll almost certainly be obliged to give up all of your credit cards as part of your plan, and you’ll be strongly advised not to take on any new credit until you’ve finished it.
These are the primary reasons why roughly half of all debtors who enroll in a DMP never complete it.
3. Credit Card Debt Consolidation
Consolidating your debts into a single, manageable account is another possibility. The main goal is to pay off the loans with higher interest rates, reduce your monthly payments, and allow you to focus on just one payment.
However, this has no effect on your overall balance. You’ll be consolidating all of your debts into a single account.
You can combine your bills by taking out a debt consolidation loan from a bank, credit union, or another financial institution. You can learn more about the different types of credit card debt consolidation loans at DebtQuestions, as well as their advantages and disadvantages.
4. Debt Settlement
Debt settlement is a commonly misunderstood procedure, but it’s actually rather straightforward and extremely successful. Working with your creditors to settle your debt is the first step, with the ultimate goal of repaying your debt for less than you owe.
You must demonstrate a true financial difficulty, such as the loss of a job or a medical condition, for creditors to consider debt settlement. You must also make the voluntary decision to stop making creditor payments.
Instead, these monies would be transferred to a separate savings account where they may be used to negotiate with and ultimately repay your creditors. You’d also be merging your bills into one monthly payment rather than making many creditor installments.
While your credit score can be affected by this, it can return to what it originally was or even higher in just a couple of years.
5. Bankruptcy
The final alternative is to file for bankruptcy if you are truly unable to repay your obligations due to a lack of income or if there is no realistic chance of repaying them in the next two to three years. However, this would severely damage your credit history.
After your bankruptcy, you will be unable to obtain new credit for at least two or three years, and if you can, it will be at an extremely high-interest rate.
For ten years, your bankruptcy will appear on your credit reports, and it will remain on your personal file for the rest of your life. Many employers now examine the files of prospective employees on a regular basis, and some may decide not to hire you if you have a bankruptcy on your record.
Step 3: Choose The Best Solution For Your Personal Financial Situation
Now that you have learned all about where you are standing financially and what your options are, it is time to take matters into your own hands and deal with the problem.
You can make a spreadsheet, if that helps you visualize, and take a closer look at where you are standing in terms of income and spending habits, compared to how each plan functions. Do you need a debt consolidation loan? To file for bankruptcy?
If that sounds like a lot of hassle and something that you might not be qualified to do, it is always best to let a finance professional offer their help.
Just taking a look at the National Debt Relief reviews should be reason enough to see just how helpful it can be.
Let National Debt Relief Handle Your Debt!
Go further down the road to getting out of debt starting today! It’s time to let go of doubts and address your pressing financial issues, the correct way.
Contact National Debt Relief and start your debt relief journey right away!