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Debt is on the rise in the United States. And according to Value Penguin, the United States consumer debt has reached about $3.9 trillion. Over 38.1 percent of households in the United States currently have credit card debt, and it keeps rising. Having debt issues is suffocating and stressful. Fortunately, there are debt relief programs that can help you get out of your debt. However, you need to educate yourself about your options before choosing a path.

Types of debt relief programs

There are four major different types of debt relief programs:

A debt consolidation loan is the process of taking a loan and using that money to pay off all your various types of debt such as credit cards, student loans, or medical loan bills.

The second option is debt management program.  This program may significantly reduce your interest rates, and possibly your monthly payment, which allows you to pay off the debt much faster while saving you thousands of dollars. 

Another option is known as a debt negotiation plan.  This is for consumers experiencing a severe financial hardship and can no longer afford to pay creditors each month.  An experienced team of negotiators will work on your behalf in an attempt to reduce the amount you owe.  

And the last option is filing for bankruptcy.

What kind of debt do you have?

While this may feel the same when you get the calls or bills from collectors, each type of debt is different when it comes to deciding the right way for debt relief. For instance, if you have child support, federal student loans, or secured loans on your home or car, you’ll not be able to eliminate them with a debt negotiation plan or consolidation program. 

How long will it take to pay off the debt?

Debt Relief programs are designed to assist a consumer become debt free as quickly as possible.  A Consolidation Program will generally take between 4-5 years while a Debt Negotiation program generally takes 2-4 years.  However, it is also up to the consumer.  The more aggressive you are with your monthly payments, the faster you may complete the program!

Once you complete a program it is time to be realistic about your lifestyle and budgeting skills. If you want to stay out of debt after you complete a debt relief program, ensure you make significant changes in your financial habits.


Managing your credit score

Some plans can severely impact your credit score. For instance, debt negotiation plan and bankruptcy can reduce your credit score, but bankruptcy has a far larger impact than debt negotiation. With bad credit, it will be challenging to take out loans for homes, cars, and personal use for several years to come. However, if you complete debt management and debt negotiation plan correctly, over time, your credit score can bounce back provided you stay current and don’t continue to accrue more debt that you don’t pay.

Contact UmbrellaDEBT

You do not have to decide which debt relief program is best suited for you before contacting a debt relief company like UmbrellaDEBT, we can work with you to decide the best solution. If you have more questions about your debt relief options, you can talk with any of our debt experts.

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