You can easily rack up debt without your knowledge if you don’t stick to your spending habits. Credit card debts and other loans can easily pile up due to ever-increasing daily demands. Therefore, it is important to keep track of your borrowings. When your debts overwhelm you, get credit card debt relief to manage your situation.

So what is debt relief? This process involves engaging your creditors to negotiate a repayment plan for your debts. One of the options may include consolidating your debts to get a more manageable monthly payment. It may also involve reducing your debts or completely forgiving what you owe. Therefore, debt relief is all about reducing your debt burden through various means.

How Debt Relief Works

If you are considering debt relief, you expect to find a way out of your crippling debt. Therefore, debt relief is a way to refinance your debt or reduce it for easy repayment. Well, it can happen in different ways which are not necessarily the same. Here are the ways in which debt relief can happen:

  • Forgiveness of a percentage of the debt

  • Agreements reached for lower interest rate on loans

  • Consolidation of loans. It’s about converging all your debts into one. This means that you will take out a new loan to pay off all existing loans. In the end, you will have a loan to repay each month.

These debt relief options help consumers and businesses avoid filing for bankruptcy, among other adverse outcomes. However, not all options work for everyone. Therefore, you need to check if you qualify for any of them.

If debt relief doesn’t seem to be working for you or you don’t qualify, consider changing your spending habits. By focusing on sustainability, you can start down the path of dealing with the situation on your own.

Consider debt relief on the following occasions:

  • If you have fallen behind in paying your credit card bills and other loans.

  • You are still in need after paying your monthly dues

  • It is difficult to manage your debts alone

  • When filing for bankruptcy is on your mind

Debt relief options to consider

After researching all the options to settle your debt burden without success, a path to debt relief is a welcome idea. However, you need to carefully consider your situation and decide what works for you. The choice of debt relief option depends on the amount you owe and the interest payable for outstanding loans. Here are the available options:

  1. Debt Consolidation

The plan here is to collect all your debts and make them one. In this case, you will apply for a new loan to clear existing loans. In the end, you will only have one loan to pay per month.

  1. Credit and debt advice

If your debt is manageable, you can seek advice on your spending habits. A credit counselor will discuss your debt, budget and general finances with you. Ultimately, they will help you develop a good strategy for managing your finances.

  1. Debt Management Plans (DMP)

With a debt management plan (DMP), you choose which debts to include in the program. After that, you make a single monthly payment split among the creditors listed in the plan. The good thing is that you don’t need a new loan to make this plan happen.

  1. Debt settlement

In this plan, debt settlement involves saving money and paying less than the remaining balance. There is a company that manages your debt in this arrangement. Therefore, they will take money equivalent to a percentage of the debt you owe.

  1. Debt forgiveness

You can opt for this as the last option. However, there are no guarantees. All the same, you can give it a shot. Some creditors may consider canceling your debt balance. Therefore, it is something worth considering.

When you have too much debt to pay, it can overwhelm you. However, you can consider debt relief options to solve your problem. Look at the options discussed here and choose what works for you. Remember that your success depends on the amount you owe and the applicable interest rates.

This article does not necessarily reflect the views of the editors or management of EconoTimes