I Need Help Paying My Bills
It seems that there has been a convergence of economic difficulties in recent years. Unemployment is high, wages are flat and inflation is rolling right along. Even if you are employed full time or in multiple jobs, it can be difficult to make ends meet. Fortunately, there is a solution to this problem in different forms of debt relief available to the public.
Causes of Debt
People end up in debt for a variety of reasons. Many times, it results from unexpected changes in economic conditions. When prices go up, it can be hard to tailor your expenses if most of them were already necessary to your survival. Many people grow accustomed to raises and an improved standard of living. When wages do not keep up with inflation, suddenly everything that you considered normal becomes very expensive. The unexpected also plays a role. Hospital bills, for example, can be a huge drain on your resources.
Debt Relief Services
If you have incurred a great deal of debt due to any of these reasons, you may have reached the point where you know that it will be impossible to ever pay them down. If that is the case, you do not have to resign yourself to bankruptcy. There are ethical and affordable ways to discharge your debts without losing everything for which you have worked in life.
Professional Help with Debt Consolidation
One of the increasingly popular resolutions for this situation is debt consolidation. There are many attractive elements in this form of relief. It allows debtors to pay less every month than they already are. It also holds out the possibility of discharging and eliminating debts entirely. Usually, a third party helps consumers by handling all the negotiations in exchange for a fee.
The process of debt consolidation begins when you explain your debt problem to a debt consolidation company. The company will calculate your total debt and your monthly payments. It will offer to help you in exchange for a single monthly payment that will replace all your other payments. Usually, this payment amounts to less than what you normally pay your creditors every month.
The debts that are eligible for this sort of debt relief are your unsecured debts. These include credit card debts, hospital bills and any debts that do not involve a bank loan. This arrangement does not cover mortgages.
Your debts do not magically disappear at this point. The consolidation company will instruct you to stop making payments on all the unsecured debts that it covers. It will also instruct you to ignore phone calls from these debtors and instead direct all communication to the debt consolidation company.
As you make payments to the debt consolidators, they will extract a small amount from each payment as their fee. The rest of the money is amassed in an account that continues to grow. They use this account to negotiate with your creditors. One by one, they convince creditors to accept a lump sum payment that amounts to less than what you owe. In exchange for one large payment, each creditor must agree to erase your debt.
The debt consolidation business continues to do this until all your debts have been erased.
After Debt Relief
Many debt consolidation companies include some credit counseling in their services. The goal of erasing debt is to avoid this kind of trouble in the future. That means that customers must learn a little about changing their spending habits.
Ironically, many debt consolidators must warn their clients about the credit card offers that will begin to appear in their clients’ mailboxes after their debt shave been erased. Eventually, a person’s credit will be cleared and will make him or her eligible for credit card offers.
Obviously, people who want to stay out of debt need to ignore these offers or choose very carefully from among them in order to achieve their goal of staying debt-free in the future.