Debt management is not a loan. Credit score is not a factor in enrolling. Participants can opt out of the program at any time. However, on-time payments must be made every month or the creditor can withdraw the interest rate concessions made to the consumer. The program covers unsecured debts, like credit cards, but not secured debts, like houses or cars.

It not only lowers interest rates, it chips away at the amount owed until, in years, you are free from the debt. Debt consolidation loans combines unsecured debt — primarily credit cards — into one loan, typically at a lower interest rate than the loans that cause the problems. The consumer makes a single payment to a single entity, at a lower interest rate.

This saves money and simplifies payments. A debt consolidation loan in Florida is a good approach for those with a good credit score. This is especially true for credit card debt. Generally, consolidation loans offer a lower interest rate than the onerous rates charged by card companies.

Debt settlement is an option in which a consumer pays less than what is owed, usually in a lump-sum payment. This may sound good, but it can be a long process and consumers must realize that it puts a damaging mark on their credit report for seven years.

In some cases, the consumer will pay half of what was originally owed. The benefit to the credit card company is that it receives some money, as opposed to little or nothing if the consumer defaults.

The negative is that debt settlement will stain your credit report, and that will last seven years. They negotiate on your behalf with the credit card companies, who must agree to the plan before it goes forward.

The process usually takes years and card companies are under no obligation to accept settlement offers. That tells a creditor their loan is at risk, so they may well be willing to take what they can get via a lump sum. Nonprofit debt settlement is offered by a small number of nonprofit credit counseling agencies.

Like debt settlement, it allows a consumer to pay less than what is owed, but there is no negotiating involved. The debt is repaid in 36 monthly installments. If the consumer misses a payment, the program is canceled. Consumers can pay off the debt early, but there is no extending the payment schedule beyond 36 months.

Also, it is certified and accredited by the National Foundation for Credit Counseling NFCC. Federal law requires the agency act in the best interest of the client.

Bankruptcy is a last resort for those in debt, but for some it might be the best approach. Bankruptcy is painful, but it does give consumers a second chance to get their finances in order. and it can be done without losing many of your possessions, including your home.

There are two types of bankruptcy. In Chapter 7 bankruptcy , non-exempt assets are sold by a trustee appointed by the court and the money is used to pay off debt. Key assets are exempt from this process, notably your home, car, personal items needed for work, pensions and Social Security.

In Chapter 13 bankruptcy , you keep your assets in exchange for making regular payments to the trustee to pay down debt. The consequences for bankruptcy are significant. Your credit score may drop points, depending on where it was when you started.

Bankruptcy stays on your credit report for years, making it more difficult to get credit for a home or car loan in the future. He or she knows the ins and outs of the system and can protect you and your family as much as possible in the process.

The statute of limitation for debt in the Sunshine State is five years. This means that a creditor has five years after your last payment to file a lawsuit against you for money owed. Once the five years has expired, a creditor has very little legal basis to a claim in court.

That emphasizes the importance of a having a reputable and helpful attorney. The five-year timeframe starts with the date of the first missed payment. The Florida Consumer Collection Practices Act FCPPA extends federal protections governing third-party collectors, like a debt collection agency, to the original creditors.

If you do not believe you owe the debt, you may write the collection agency within 30 days of being contacted saying you do not owe the bill and the agency must stop contacting you unless they have written proof of the debt, like a copy of the bill.

Floridians were hit hard by the COVID pandemic. In , the state ranked second in the country in both bankruptcy filings 13, and foreclosures 2, If you can, use a credit counselor you can meet in person.

Non-profit credit counseling programs are often offered through. Your financial institution or local consumer protection agency also may be able to refer you to a credit counselor.

Some credit counseling organizations charge high fees, which they might not tell you about. Choose an organization that:. Be sure to get every detail and promise in writing, and read any contracts carefully before you sign them.

A good credit counselor will spend time reviewing your specific financial situation and then offer customized advice to help you manage your money. But if a credit counselor says a debt management plan is your only option, and says that without a detailed review of your finances, find a different counselor.

You want to be sure they offer the types of modifications and options the credit counselor describes to you. Whether a debt management plan is a good idea depends on your situation.

A successful debt management plan requires you to make regular, timely payments, and can take 48 months or more to complete. You might have to agree not to apply for — or use — any more credit until the plan is finished.

No legitimate credit counselor will recommend a debt management plan without carefully reviewing your finances. Debt settlement programs are different from debt management plans. Debt settlement programs are typically offered by for-profit companies to people with significant credit card debt.

They agree that this amount will settle your debt. These programs often encourage you to stop making any monthly payments to your creditors. Debt settlement programs can be risky. Even if a debt settlement company does get your creditors to agree, you still have to be able to make payments long enough to get them settled.

You may not be able to settle all your debts. The process can take years to complete. If you do business with a debt settlement company, you may have to put money in a special bank account managed by an independent third party. The money is yours, as is the interest the account earns.

Before you sign up for its services, the company must tell you. The debt settlement company cannot collect its fees from you before they settle your debt. Generally, there are two different types of fee arrangements a proportion of the amount of debt resolved or a percentage of the amount saved.

Each time the debt settlement company successfully settles a debt with one of your creditors, the company can charge you only a portion of its full fee. The debt settlement company also must tell you that. Never pay any group that tries to collect fees from you before it settles any of your debts or enters you into a debt management plan.

Instead of paying a company to talk to creditors on your behalf, you can try to settle your debt yourself. If your debts are overdue the creditor may be willing to negotiate with you. They might even agree to accept less than what you owe.

If you do reach an agreement, ask the creditor to send it to you in writing. And just like with a debt settlement company, if your agreement means late payments or settling for less than you owe, it could negatively impact your credit report and credit score.

It is a way of consolidating all of your debts into a single loan with one monthly payment. You can do this by taking out a second mortgage or a home equity line of credit. Or, you might take out a personal debt consolidation loan from a bank or finance company.

Some of these loans require you to put up your home as collateral. Most consolidation loans have costs. Bankruptcy is generally considered your last option because of its long-term negative impact on your credit.

Bankruptcy information both the date of your filing and the later date of discharge stays on your credit report for 10 years. That can make it hard to get credit, buy a home, get life insurance, or get a job. The two main types of personal bankruptcy are Chapter 13 and Chapter 7. You must file for them in federal bankruptcy court.

Filing fees are several hundred dollars, and attorney fees are extra. For more information, visit the United States Courts. Both types of bankruptcy may discharge and get rid of unsecured debts like credit card or medical debt , and stop foreclosures, repossessions, garnishments , and utility shut-offs, as well as debt collection activities.

They also give exemptions that let you keep certain assets, though how much is exempt depends on your state. Generally, Chapter 13 lets people with a steady income keep property, like a mortgaged house or a car, which they might otherwise lose through the bankruptcy process.

In Chapter 13, the court approves a repayment plan that lets you pay off some of your debts in three to five years, rather than give up any property. Chapter 7 is known as straight bankruptcy. Exempt assets might include cars, work-related tools, and basic household furnishings.

Some of your property may be sold by a court-appointed official, called a trustee, or turned over to your creditors.

You have to get credit counseling from a government-approved organization up to six months before you file for any bankruptcy relief. You can find a state-by-state list of government-approved agencies at the U.

Trustee Program , the organization within the U. Department of Justice that supervises bankruptcy cases and trustees. You have to file a certificate with the bankruptcy court proving that you took the course. The amount varies by state —learn more from the U. Trustee Program. You have to take a debtor education course from a government-approved organization about things like developing a budget, managing money, and using credit wisely.

To find a counseling organization, check the list of approved debtor education providers. Only time can make accurate information go away. A credit bureau can report most accurate negative information for seven years and bankruptcy information for ten years.

Best for student loan consolidation: SoFi ; Best for fair/average credit: Upstart ; Best for consolidating debt while improving financial literacy: Upgrade ; Best Federal government debt relief programs in the form of financial help include long-time programs such as Supplemental Nutrition Assistance Program (SNAP A BBB A+ accredited consolidation debt company, National Debt Relief credit card debt relief programs get consumers out of debt without loans or bankruptcy

Debt assistance programs - A debt management plan allows you to pay your unsecured debts — typically credit cards — in full, but often at a reduced interest rate or with Best for student loan consolidation: SoFi ; Best for fair/average credit: Upstart ; Best for consolidating debt while improving financial literacy: Upgrade ; Best Federal government debt relief programs in the form of financial help include long-time programs such as Supplemental Nutrition Assistance Program (SNAP A BBB A+ accredited consolidation debt company, National Debt Relief credit card debt relief programs get consumers out of debt without loans or bankruptcy

A successful debt management plan requires you to make regular, timely payments, and can take 48 months or more to complete.

You might have to agree not to apply for — or use — any more credit until the plan is finished. No legitimate credit counselor will recommend a debt management plan without carefully reviewing your finances.

Debt settlement programs are different from debt management plans. Debt settlement programs are typically offered by for-profit companies to people with significant credit card debt. They agree that this amount will settle your debt. These programs often encourage you to stop making any monthly payments to your creditors.

Debt settlement programs can be risky. Even if a debt settlement company does get your creditors to agree, you still have to be able to make payments long enough to get them settled. You may not be able to settle all your debts. The process can take years to complete.

If you do business with a debt settlement company, you may have to put money in a special bank account managed by an independent third party.

The money is yours, as is the interest the account earns. Before you sign up for its services, the company must tell you. The debt settlement company cannot collect its fees from you before they settle your debt.

Generally, there are two different types of fee arrangements a proportion of the amount of debt resolved or a percentage of the amount saved. Each time the debt settlement company successfully settles a debt with one of your creditors, the company can charge you only a portion of its full fee.

The debt settlement company also must tell you that. Never pay any group that tries to collect fees from you before it settles any of your debts or enters you into a debt management plan.

Instead of paying a company to talk to creditors on your behalf, you can try to settle your debt yourself. If your debts are overdue the creditor may be willing to negotiate with you. They might even agree to accept less than what you owe. If you do reach an agreement, ask the creditor to send it to you in writing.

And just like with a debt settlement company, if your agreement means late payments or settling for less than you owe, it could negatively impact your credit report and credit score. It is a way of consolidating all of your debts into a single loan with one monthly payment. You can do this by taking out a second mortgage or a home equity line of credit.

Or, you might take out a personal debt consolidation loan from a bank or finance company. Some of these loans require you to put up your home as collateral. Most consolidation loans have costs. Bankruptcy is generally considered your last option because of its long-term negative impact on your credit.

Bankruptcy information both the date of your filing and the later date of discharge stays on your credit report for 10 years. That can make it hard to get credit, buy a home, get life insurance, or get a job. The two main types of personal bankruptcy are Chapter 13 and Chapter 7.

You must file for them in federal bankruptcy court. Filing fees are several hundred dollars, and attorney fees are extra. For more information, visit the United States Courts.

Both types of bankruptcy may discharge and get rid of unsecured debts like credit card or medical debt , and stop foreclosures, repossessions, garnishments , and utility shut-offs, as well as debt collection activities. They also give exemptions that let you keep certain assets, though how much is exempt depends on your state.

Generally, Chapter 13 lets people with a steady income keep property, like a mortgaged house or a car, which they might otherwise lose through the bankruptcy process.

In Chapter 13, the court approves a repayment plan that lets you pay off some of your debts in three to five years, rather than give up any property. Chapter 7 is known as straight bankruptcy. Exempt assets might include cars, work-related tools, and basic household furnishings.

Some of your property may be sold by a court-appointed official, called a trustee, or turned over to your creditors. But there are other options to consider, too, including:. Credit card debt can be overwhelming, but you don't have to deal with it forever.

If debt consolidation loans are unavailable and debt consolidation programs don't offer enough relief, it may be wise to use a debt settlement company to try and get a percentage of your debt forgiven. But if debt settlement doesn't provide enough relief, it may be time to file bankruptcy and restart on a clean financial slate.

Joshua Rodriguez is a personal finance and investing writer with a passion for his craft. When he's not working, he enjoys time with his wife, two kids, three dogs and 10 ducks.

Joshua Rodriguez. Twitter Facebook. Thanks for reading CBS NEWS. Please enter email address to continue. Please enter valid email address to continue. Is whole life insurance worth it for seniors?

Here's what experts say. Should you open a gold IRA right now? Why you should open a CD this February. View CBS News In. CBS News App Open. Additionally, most companies will charge a fee of up to 25 percent of the total amount of debts settled.

Just like debt relief companies, credit counseling agencies work with your creditors to negotiate a lower payment on your behalf. There are multiple ways to go about debt relief. Follow these steps to find the right option for your needs. To choose the best form of debt relief, you need to know the types of debt you have — credit card debt, personal loan, medical bills or the like — how much you owe, your current interest rate and monthly payment.

Many lenders, as well as debt relief companies and credit counseling agencies, have a minimum debt requirement for you to apply for relief. Additionally, knowing how much you owe, at what rate and the sum of all your monthly payments, will allow you to choose a debt relief plan that makes sense for your budget and help you set realistic goals.

Many banks, credit unions and credit card companies offer free credit reports and scores as part of their services. You can also get a free annual copy of your credit report from all three major credit bureaus — Equifax, Experian and TransUnion — by visiting AnnualCreditReport.

There are three main approaches to debt relief: DIY-ing a debt management plan, using a debt relief company or enlisting the help of a credit counselor. Caret Down. These documents will help the lender, debt relief company or credit counseling agency understand your full financial picture and determine your eligibility for debt relief, as well as your options.

Although bankruptcy can provide some much-needed debt forgiveness, it comes with long lasting consequences that can drag down your credit score for up to 10 years. Filing for bankruptcy could hinder your ability to secure affordable credit products in the future, as many lenders will see you as a higher risk.

As such, bankruptcy should only be pursued as a last resort. Debt relief can come in several forms, including debt consolidation loans, debt settlement negotiations and debt management plans.

As a last resort, bankruptcy can help some borrowers — though it does not erase all types of debt, and can ding your credit score for up to 10 years. The option that will be most helpful to you depends on your personal situation, behaviors and tolerance for long-term impact on your credit. Where to get a home equity loan: finding the best lender for your needs.

How to consolidate business debt. Where can I get an unsecured business loan? How much would you pay to get a job?

Heidi Rivera. Written by Heidi Rivera Arrow Right Writer, Personal Loans. Heidi Rivera is a personal finance writer and reporter for Bankrate. Her areas of expertise include personal loans, student loans and debt consolidation, in addition to data collection and analysis.

Hannah Smith. Edited by Hannah Smith Arrow Right Editor, Personal Loans. Hannah has been editing for Bankrate since late They aim to provide the most up-to-date information to help people navigate the complexities of loans and make the best financial decisions.

Bankrate logo The Bankrate promise. Bankrate logo Editorial integrity.

Debt assistance programs - A debt management plan allows you to pay your unsecured debts — typically credit cards — in full, but often at a reduced interest rate or with Best for student loan consolidation: SoFi ; Best for fair/average credit: Upstart ; Best for consolidating debt while improving financial literacy: Upgrade ; Best Federal government debt relief programs in the form of financial help include long-time programs such as Supplemental Nutrition Assistance Program (SNAP A BBB A+ accredited consolidation debt company, National Debt Relief credit card debt relief programs get consumers out of debt without loans or bankruptcy

Enrolling in a debt management program could lead to a more manageable arrangement for getting out of debt , but it also involves some sacrifices.

Debt consolidation involves taking out a new loan or credit to pay off debt. In effect, this allows you to combine multiple debts into one. The goal of debt consolidation is to make debt payment more affordable or more manageable.

But this option has its own risks and rewards:. Debt settlement involves negotiating with creditors to pay less than the full amount you owe. You can attempt to make these negotiations yourself, or work with a debt settlement company that negotiates on your behalf.

A debt settlement company will take over management of your debt accounts, collect monthly payments and keep them in a savings-type account minus fees , and eventually offer some of the funds to your creditors as lump-sum settlements.

In addition to debt settlement, there may be other ways to have some of your debt forgiven. In fact, some options for reducing debt could save you money and help preserve your credit.

The best solution for you might even include a combination of DIY solutions, budget tools or financing options. Here are some of the things you can do on your own:. Are you clear on where all your money is going? There are plenty of tools that range from simple to advanced, so it could be as easy as linking your spending accounts and waiting for alerts or recommendations.

You can also use platforms that let you set parameters for certain spending categories, or set a specific goal so you can automatically track your progress, like a debt payoff goal. Your mortgage is likely the largest debt you owe. For that same reason, refinancing your mortgage could be your biggest opportunity to get financial relief.

A mortgage refinance can be hard to qualify for, but it can also result in lower monthly payments, a better interest rate or a paying off the debt sooner. Not sure if you should try refinancing? Some credit card companies may be flexible when it comes to your payment terms.

They may be willing to negotiate your interest rate — especially if you have a history of on-time payments on the account — offer you a hardship payment plan, or reduce your minimum payment.

Sharing this information could help you negotiate a lump-sum payment, since settling is more attractive to creditors than being forced to forgive your full balance in a bankruptcy. If a bill goes unpaid for several months or more, it may end up being sent to a collections department or sold to a debt collection agency.

There are several ways to go about resolving collection debt, and similar to debt settlement, you may not need to pay the full balance. There are, however, similar pros and cons to debt settlement, such as how your credit will be impacted and the tax ramifications for having debt forgiven.

If you do want to pursue relief from collections debt, there are a few steps you should take to get the most relief:. Individuals who are seeking debt relief can be a major target for scammers. If someone reaches out to you with an offer of student loan forgiveness or mortgage help — even if they claim to be a government agent or a representative of your lender —they are likely trying to ensnare you in a scam for money.

You should always contact your lender directly to confirm the legitimacy of the offer. Make sure to look up reviews of the so-called debt relief company, too. Unfortunately, most quick solutions can cause even bigger financial problems.

But before taking any action, the best starting place is to carefully weigh your choices. Take a look at our list of pros and cons to determine the best two or three options based on your financial situation. A professional counselor can offer you tailored advice, answer your specific questions and even enroll you in a debt management plan.

And the best part is that their credit counseling is free. His interest in sports has waned some, but he is as passionate as ever about not reaching for his wallet. Bill can be reached at [email protected]. org wants to help those in debt understand their finances and equip themselves with the tools to manage debt.

Our information is available for free, however the services that appear on this site are provided by companies who may pay us a marketing fee when you click or sign up. These companies may impact how and where the services appear on the page, but do not affect our editorial decisions, recommendations, or advice.

Here is a list of our service providers. Debt Relief. Choose Your Debt Amount. Call Now: Continue Online. Debt Relief and Reduction Debt is an unfortunate fact of life for many Americans.

What Is Debt Relief? You struggle to cover your monthly necessities, or you live paycheck-to-paycheck, due to debt obligations. You avoid answering calls or opening mail for fear of being contacted about unpaid debt.

Most nonprofit organizations offer credit counseling sessions for free. Just be sure to check, since some agencies could require payment for certain services. Reduced interest rates or monthly payments.

A debt consolidation loan or debt management program can reduce the amount of interest you pay on your debt, or get you into a lower, more affordable monthly payment.

Professional support. Certified credit counselors can help consumers build an affordable budget, understand their debt-relief options and clean up their credit reports. Reduced debt amount. A fresh start.

Stop debt collector calls and letters. Some debt-relief options can help you get on better terms with your lender, or find ways to stop them from making constant contact. This can be done by getting on a plan to rehabilitate your debt, for example, or by filing bankruptcy to stop them from making collection efforts.

Here are a few of the cons to consider: Time commitment. There is no instant fix with debt-relief. No guarantees. Lenders usually want to work with you, but they can choose not to.

This is especially true with debt settlement. Fees for services. With the exception of some nonprofits, there will be a fee for debt relief. Late fees and other penalties.

These fees are specifically an issue when it comes to debt settlement , but could be assessed any time you miss a monthly debt payment. Tax consequences. If you have debt forgiven, it may be considered taxable income. If so, the creditor who forgives the debt will send you a C detailing how much the original debt was and how much was forgiven.

Credit damage. Debt settlement and bankruptcy can have damaging effects on your credit scores. Even if you eventually settle or get the debt dismissed, a record of the incident will remain on your credit reports for , and can make it difficult to get approved for loans at affordable rates in the near future.

Some of the professional credit card debt relief programs include: In summary, there are a number of ways to get relief, and each has its own pros and cons.

When it comes to getting getting help paying credit card debt , be sure to weigh the potential rewards and consequences of each of the following options before choosing which route to take: Credit Counseling Debt Management Programs Debt Consolidation Debt Settlement Bankruptcy Here is a look at each of those solutions and how debt relief works.

Programs and Services Often Left to a Professional You may choose to handle debt relief yourself, but working with a professional could lead to more options for restructuring or reducing your debt. Credit Counseling Working with a nonprofit credit counseling agency means having a professional to guide you through all your options for debt relief.

Pros of Credit Counseling Most nonprofit organizations offer credit counseling sessions for free, including debt management plans DMPs , however some charge a fee for this service. Credit counselors obtain and maintain professional certifications.

These personal finance professionals can teach you the basic skills to reduce debt and manage your expenses. They often offer a suite of services, available through a series of phone or in-person appointments, that are meant to help consumers avoid financial emergencies, manage debt, build credit, achieve financial stability and more.

Cons of Credit Counseling Each agency is different. Not all agencies deliver what they advertise, and some for-profit companies even try to appear similar to nonprofit credit counseling agencies.

Make sure you find a reputable credit counseling agency to help in your debt relief journey. Requires flexibility. Credit counselors aim to offer the best financial advice based on all of the information you share. That means the advice you get may not be what you wanted.

A credit counselor should present you with a clear plan of action, but it may take more time and effort than you expected to reach your goal. Long-term commitment. If you get set up on a DMP, it could take a few years to pay off all of your debt, and you may have to close all but one of your credit card accounts.

The end-goal of being debt-free is likely worth it, but some consumers lose patience and drop out before they eliminate all their debt. Long-term credit benefits. A debt management program can save you from damaging your credit by avoiding missed payments.

Plus, your scores will improve as you pay down debt balances over time. Budget support. Your credit counselor will help you create an affordable monthly budget that includes your debt payments. New credit terms. Under a DMP some of your creditors may agree to reduce your monthly payment amount, reduce your interest rate, or forgive certain fees.

Cons of Debt Management Plans Time Commitment. Debt management programs typically take years to complete. The counseling agency usually charges an enrollment and maintenance fee to help cover the cost of their services, including processing your payments.

That could include an increase in your interest rates or monthly payments, or reinstated late fees. Short-term drop to credit scores.

If they don't accept it, you could end up with a larger debt burden than you started with, and if they do, you'll likely need to pay income taxes on the amount of debt that was forgiven. Find out how a debt relief service can help you now.

If credit card debt settlement doesn't provide enough relief, it may be time to reach out to a bankruptcy attorney. Sure, bankruptcy will likely harm your credit score and ability to borrow in the near term, but as a last resort, it's often an effective way to get out of overwhelming credit card debt.

Debt settlement programs and bankruptcy both have the potential to result in forgiven debt, but they're also likely to have a significant impact on your credit score and your ability to borrow.

But there are other options to consider, too, including:. Credit card debt can be overwhelming, but you don't have to deal with it forever. If debt consolidation loans are unavailable and debt consolidation programs don't offer enough relief, it may be wise to use a debt settlement company to try and get a percentage of your debt forgiven.

But if debt settlement doesn't provide enough relief, it may be time to file bankruptcy and restart on a clean financial slate. Joshua Rodriguez is a personal finance and investing writer with a passion for his craft. When he's not working, he enjoys time with his wife, two kids, three dogs and 10 ducks.

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