Many individuals make the mistake of comparing the pros and cons of Debt Relief Programs before they actually opt for any of the available debt relief options. This is a very dangerous step, as it could result in you taking yet another loan just to get out of your financial mess. There are many pros and cons of debt relief programs, so you should make the comparison properly and only then should you opt for the one that suits your requirement. Listed below are the pros and cons of debt relief programs.
The first thing that you need to know is that if you opt for credit counseling, you may not have to worry about your debt ever getting out of control. This is because a good credit counselor will be able to negotiate with your creditors and convince them to give you a reduction in the total amount owed. You may have to pay a few hundred dollars as fees to a good credit counselor, but at least you will be free from heavy interest payments and penalties. You may have to wait up to six months or more for the entire reduction in your credit card debts to be applied.
You will have to make monthly payments to the credit counseling company and will have to make sure that you make timely payments. Many individuals who opt for debt relief programs end up being debt free in two years. These individuals were able to pay their installment on time and were able to do so without taking further loans. This is because they were able to save and were able to make their payments on time.
On the other hand, if you don’t get a debt reduction of more than ten percent, you may not even qualify for debt relief programs. This is because you may have defaulted on your previous loans and may never have been able to make a regular payment. So, even if you qualify for a debt reduction, you still need to work hard to make sure that you don’t default on any of your loans once again. However, if you can get a reduction that is close to twenty percent, you will have paid down your debt in a short period of time without having to resort to bankruptcy.
There are some disadvantages that you should also consider when it comes to debt relief programs. First, you may have to have assets such as stocks or bonds in order to qualify for these programs. If you cannot obtain a debt consolidation or settlement, you may end up losing all of your assets in case you go bankrupt because some debt relief programs do require you to liquidate some of your assets in order to settle your debt.
When you look at pros and cons of debt relief programs, it is important to determine whether or not you are a good candidate for one of these programs. If you do not own too much property and if you do not own too many credit cards, you should not apply for one of these programs. If you are in good health, you may also be able to make a good payment plan on your own. If you are unemployed, you may be better off with credit counseling services. On the other hand, if you own a home, and if you have experienced some financial difficulties recently, you may be able to qualify for debt consolidation or settlement.