Braidwood Capital has begun flooding the market with debt consolidation and credit card relief in the mail. The problem is that the terms and conditions are at the very least confusing, and possibly even suspect. The interest rates are so low that you would have to have near-perfect credit to be approved for one of their offers. Best 2019 Reviews, the personal finance review site, has been following Braidwood Capital, Tiffany Funding, Nickel Advisors, Coral Funding, Neon Funding, Ladder Advisors (also known as Carina Advisors, Corey Advisors, Pennon Partners, Jayhawk Advisors, Clay Advisors, Colony Associates, and Pine Advisors, etc.).
Debt can have severe consequences on an individual’s life. The journey towards debt elimination is mostly rocky and full of challenges. If you’re ridden with the unbearable burden of debt and want to improve your financial health, then we’re here to help.
Before you choose an option, let’s go through the various debt relief options in detail to determine which would work in your best interest.
When should you choose debt relief?
When you look up debt relief, you’ll come across various options. The right choice of a debt relief program varies from situation to situation. In some cases, declaring bankruptcy might be the best option for debt elimination, while in others, negotiating with the creditor for a reduced amount may be the best choice.
Generally, you can consider debt relief options in the situations mentioned below:
- When you can’t negotiate a repayment plan with your creditor alone and have a massive amount of debt
- When you can’t make any more cuts in your budget, and it isn’t possible to cut down on expenses
- When you can’t increase your income
- When you’re sure that you can’t pay off your debt in the next five years
It’s usually better to pursue debt consolidation before looking at debt-relief options. However, if you’ve done all that you could to pay off your debt and cut down your expenses, then debt relief might be the best choice for you.
Type of debt relief programs
There are three main types of programs when it comes to debt relief options. Let’s take a look at each of them individually below:
1. Debt management plan
If you have a massive amount of debt to your name and you can’t figure out how to get rid of it, then you should consider signing up for a debt management plan. Credit counseling agencies assign an experienced credit counselor to your case, who will help you devise a management plan that is feasible for you.
Through a debt management plan, you’ll have to make monthly payments to the credit agency, and they’ll pay your creditors as per the agreed plan. Your counselor can also negotiate with your creditors to lower the interest rates and exempt extra charges.
Debt management plans only work if you’re able to make timely payments as per the agreement.You might also be prohibited from applying for any other credit during the repayment period.
2. Debt settlement program
For a debt settlement program, you’ll have to work with a debt settlement company that can represent you in the negotiations with your creditors. The company will work with the creditors to get them to settle for a reduced amount instead of repaying the debt to them in full.
For instance, a debt relief company can help reduce the owed amount by 30% to 35%. So, if you owed $30,000 in debt, then you may only have to pay $22,500 to eliminate your debt with debt settlement.
This may sound lucrative at first, but debt settlement comes with its risks. When you apply for a debt settlement program, your settlement company would usually ask you to stop paying to your creditors. During the time of negotiations, you’ll continue to be charged with a late fee, penalties, and an increase in interest rate. This can damage your credit score quite a lot. As a result, you could be left with more debt than before the process.
Furthermore, debt settlement companies usually charge a very high fee for representing you. For instance, the National debt relief program charges up to 25% of the enrolled debt, and the program can last as long as four years.
The amount you save with debt settlement might make the charges worth it. Still, you need to consider all your options very carefully before deciding to pursue a debt settlement program. Additionally, you should also consider the possibility of the negotiations not working out. However, a settlement company can’t legally charge you unless they have settled a negotiation for you.
3. Declaring bankruptcy
If you’re out of all options and know for sure that there isn’t any way out of debt, then you can consider declaring bankruptcy as the last option.
When a debtor declares bankruptcy, the case goes to court. Then, the court reviews your case thoroughly to determine whether you qualify for bankruptcy. If you’re found unable to pay off your debt, then the court issues an order that discharges you from all your debt, including credit card loans, personal loans, medical bills, etc.
Once the course dischargesyou from debt, you won’t have to make any more payments to your creditors. The credit companies will be legally barred from sending you any more letters, making phone calls inquiring about payments, and garnishing any of your wages.
Bankruptcy might initially seem like an easy way out, but it bears long-lasting consequences. Your credit report can carry your bankruptcy information for ten years. Consequentially, it will become difficult for you to qualify for the credit, buy a house, or even applying for life insurance.Plus, the whole process is quite costly. The court fee, along with the fee of an attorney, can make up a massive amount.
If you plan on pursuing bankruptcy, you should first look for credit counseling from an organization that is approved by the government at least six months before going through with the bankruptcy filing.
When should you not choose debt relief?
Debt relief programs are an excellent option for people going through an emergency, such as losing employment or going through a medical emergency that requires urgent attention. However, it’s not always the best option in normal situations. Check out the following three scenarios in which debt relief might not be the best choice.
1. If you haven’t spoken to your creditors about your situation
If you find yourself in a situation where you aren’t able to make your payments, you should first reach out to your creditors. Many loan providers offer hardship programs to their customers that allow you to pay off your debt with reduced interest rates and lower monthly payments.
2. If you can pay off your debt in the next five years
If you think you can pay off your debt within the next five years by cutting off on some expenses and living on a budget, then you shouldn’t consider debt relief. Paying off your debt on your own will prevent you from damaging your credit score.
3. If you qualify for debt consolidation
If you have a good credit score that allows you to bag a decent debt consolidation offer, then you should go with it instead of a debt relief program.
Paying off debt can feel like an uphill journey, but there are always options that can help you get out of a difficult situation. Debt relief programs are a good opportunity for people who are no longer able to pay their dues.