Being in significant debt is overwhelming. Many people don’t know where to turn or even how to take a step on the right road to financial recovery. People who find themselves in heavy debt have the right to use debt reduction services to help clean up their finances. This article outlines what a debt reduction service does to help you meet your debt obligations.
Factors to Consider About Debt
Deciding to pay off debt isn’t an easy decision because it takes consideration, planning, and discipline. Think about the following questions when researching your debt payoff options:
Paying the smaller debts first give a sense of accomplishment and encourage the payments on larger debts. It also eliminates smaller payments and frees up money for larger debt.
Look at the financial and legal obligations that must be paid first. If you can’t make these payments and all of your other payments, evaluate your monthly budget. Think about the things you can do to change that budget. It usually includes things like changing spending habits and boosting your income.
No one wants to consider bankruptcy. It is usually the method of last resort. But it is a way to get out of debt. Depending on the amount of debt and type, it might be the only way for some people. It won’t release you from all debts though, so considering every debt resolution option available is a must.
Just like smaller debts are important, high-interest rate credit cards are as well. If a high-interest rate card is boosting up your personal debt think about paying this off first.
Defining Debt Reduction
Debt reduction helps to clear away financial debt quickly. Unlike credit counseling, which helps to manage debt and spending habits, debt reduction seeks settlements from people you owe. A negotiator’s goal is to settle for a number that is lower than what you owe. If you have that money on hand, the settlement is paid for and is one less debt to worry about.
Debt Reduction, Credit Counseling, and Debt Management
It’s important to understand that debt reduction services are not for everyone. But for people in significant or heavy debt, debt reduction services provide a way to actually make progress in paying off their financial obligations.
A good first step in determining whether debt reduction is for you or not is by consulting a credit counselor or two. The consultation is free and counselors are typically certified in budgeting, money management, consumer credit, and debt management. This consult may take more than one session. Some credit counselors offer a budget and a recommendation for what to do next depending on the situation at hand. Other credit counseling services are offered in conjunction with a debt management program.
Debt management programs typically do not impact your credit score. Since they are also offered along with credit counseling services, debt management programs reduce interest rates and they give you an action plan to take. If you choose to go with the plan and enroll in the program, a debt management program takes a set amount of money from you every month and pays them out to each company.
This does not impact your FICO score. But the downside to debt management programs is that the payments are usually higher than with debt reduction. This is a defining difference for people who have a heavy debt load without enough income to pay it off.
Debt Reduction Considerations
Debt reduction is another option. Like debt management, it offers an alternative to bankruptcy. Not all debt resolution services are created equal. If this path appeals to you as a consumer, be sure to do all of your research. Find out:
- What reviews the company has received
- The costs involved
- Requirements of the program
- How long it will take to resolve your debt in total
- The impact on your credit score
Choosing a Nationwide Debt Reduction Service
Nationwide Debt Reduction Services helps consumers reduce their debt by first having a consultation with them. Like debt resolution, the representative has an in-depth conversation about the financial situation of the potential client. Based on this information, a customized plan is developed that includes a monthly payment. This payment is based on an amount the client is able to afford.
Once the client enrolls in the program, that payment is sent to a dedicated saving n escrow account every month and funds build up until they reach a level where a debt is payable. Programs typically last for 36 months but may be more or less depending on individual circumstance. Negotiators work on your behalf during this time to arrange for a settlement on your debts. Not using further credit is something Nationwide asks customers to do upon enrollment.
All settlements must be authorized by the client and once paid, the creditors may report to the credit bureau that the debt has been settled. Once the program is complete, you will be able to use credit again.
The decision to get out of debt isn’t easy. But services like Nationwide Debt Reduction Services help consumers get out of debt without resorting to bankruptcy. If debt management or DIY debt resolution isn’t for you, contact us and we’ll help you take the first step in becoming debt free.