Dealing with debt problems (2024)

FAQs

Is it a good idea to use a debt relief program? ›

Debt relief plans can help make your payments more manageable, but they're not right for everyone. It's important for you to understand how each plan or program works and how debt relief can affect your finances.

Unfortunately, there is no such thing as a government-sponsored program for credit card debt relief. In fact, if you receive a solicitation that touts a government program to get you out of debt, you may want to think twice about working with that company.

Is National Debt Relief legit? National Debt Relief is an accredited member of the American Association for Debt Resolution (AADR). It has been around since 2009 and has helped over 600,000 individuals reduce their debt. It also has an A+ rating from the BBB (Better Business Bureau).

Creditors are not legally required to settle for less than you owe. Stopping payments on your bills (as most debt relief companies suggest) will damage your credit score. Debt settlement companies can charge fees. If over $600 is settled, the IRS will view this debt as a taxable income.

Debt relief won't hurt your credit alone. However, closing your oldest accounts can drastically lower your standing. Debt relief and debt settlement options don't hurt your credit score on their own.

National Debt Relief, a debt settlement firm, negotiates with creditors to reduce consumer debt. They offer free consultations and will customize plans to make debt payoff affordable. Depending on factors like your debt size, budget and negotiated amount, you could pay off your debts within 24 to 48 months.

If you have loans that have been in repayment for more than 20 or 25 years, those loans may immediately qualify for forgiveness. Borrowers who have reached 20 or 25 years (240 or 300 months) worth of eligible payments for IDR forgiveness will see their loans forgiven as they reach these milestones.

How do you deal with debt when you can't pay? ›

Get professional help: Reach out to a nonprofit credit counseling agency that can set up a debt management plan. You'll pay the agency a set amount every month toward each of your debts. The agency works to negotiate a lower bill or interest rate on your behalf and, in some cases, can get your debt canceled.

While there isn't a specific credit card debt relief program operated by the government, several options are available that can help you manage and reduce your debt.

Chances are your credit score may have already taken a dive due to missed payments, but it will continue to drop further as you work with Freedom Debt Relief as part of its debt settlement program. Paying off your debt in this way might seem more important, but the damage to your credit score can last for years.

President Biden announced new plans to cancel student debt under the Higher Education Act. If implemented as proposed, these plans would authorize waivers to: Cancel up to $20,000 in interest for all borrowers who have accrued or capitalized interest on their loans since entering repayment.

Drawbacks of Debt Settlement:

Adverse impact on credit score: Post-settlement, re-establishing credit to secure loans or make major purchases can take up to seven years. No guaranteed savings: Creditors aren't mandated to settle, which can lead to legal repercussions or involvement of collection agencies.

Benefits of debt forgiveness

It offers a bankruptcy alternative, allowing individuals to resolve their debts without the expenses and long-term consequences associated with filing for bankruptcy. Forgiven debt often means paying less than the initial amount owed, saving borrowers money in the long run.

If you're juggling multiple high-interest debts, such as credit cards, personal loans or medical bills, it might be time to consider a debt relief program.