5 Key Signs You’re a Good Candidate for a Debt Relief Program
Written by
Aja McClanahan
Edited by
T. Woods
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Debt relief programs can help those drowning in overwhelming amounts of debt. For example, if you find it increasingly difficult to make minimum debt payments, you likely need help controlling your debt. In this case, a debt relief program may help.
However, debt relief programs, also known as debt settlement companies aren’t for everyone. For instance, debt settlement may not be ideal if you have mostly secured debt, access to a debt consolidation loan, or other viable means to pay off debt.
This guide will help you understand if you’re a good candidate for debt relief. Keep reading to learn more.
1. You’ve Got a Lot of Unsecured Debt
Debt relief programs are mainly for those who need help with unsecured debt. Creditors extending secured loans will typically attempt to recover the collateral securing the loan before renegotiating the terms of the debt. If your debt consists of accounts like credit cards, personal loans, medical bills and similar unsecured debt, a debt relief program be for you.
2. You’re Having Trouble Making Minimum Payments
If making minimum debt payments is becoming difficult, it could mean you’re experiencing financial duress, which could turn into a full-blown financial insolvency. Instead of letting your debt overtake your life and income, you should consider getting help from a debt relief program.
3. Your Debt-to-Income (DTI) Ratio is High
If your credit card debt has increased due to overspending, accumulating interest or both, then your DTI will be high, which is another sign that you’re headed for financial duress. To prevent debt from hindering your financial progress, it’s best to take steps to remedy the situation sooner than later.
4. You Meet the Income Requirements
To qualify for debt relief, you must be able to make a certain amount of payments on your debts each month, plus cover any fees related to the debt relief program. If your income is too high, you may not qualify according to the company’s eligibility requirements.
5. You Don’t Mind the Potential Consequences
There are many risks with debt relief programs. One approach requires you to stop making payments on your debt so the debt relief company can negotiate your balances down to a more manageable amount. In most cases, your credit score could drop, and future financial opportunities will be affected.
Also, there’s no guarantee that the debt settlement company will successfully negotiate your debt, which could further impact your credit score and potentially leave you deeper in debt.
Final Thoughts
Debt relief programs can be helpful for those who qualify, but they are not a one-size-fits-all solution. If you’re a candidate for this financial help, be sure to vet companies and their customer service ratings before moving forward. If you don’t qualify for debt relief, you could explore other alternatives to manage your debt, such as debt consolidation or bankruptcy.
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