Debt Options

​Why Choose Debt Consolidation?
Working with credit counseling organization such as community credit repair can save you money over time, develop a long-term solution, and is effective because of adherence to governmental regulations.

1. Is it right for you? 
   Some indicators that you should consider debt consolidation include your expenses often exceeding your income, feeling reliant on credit cards or payday loans or your payments toward debt are taking more and more of your monthly budget. If you are worried your debt is getting out of control and are committed to paying it in full, then taking action sooner rather than later can save you money, time, and hassle. Consolidating your debt may be the best way to do so if you are battling growing balances, have high-interest rates or unmanageable monthly payments, or are frequently contacted by creditors attempting to collect on your debt. To successfully achieve debt relief through debt consolidation, you must be willing to provide necessary documents relating to your debt, revise current spending habits to create room in your budget for one monthly payment, and cease most credit usage for the length of your repayment plan.
2. Do you qualify?
   Unlike a debt consolidation loan, a debt management program does not have any financial qualifiers. Anyone can take advantage of this type of program. However, if your combined debt falls under $1,000, your best option is to repay the debt on your own. A consultation, during which a nonprofit credit counseling agency reviews your finances, can help you create a debt repayment strategy. Debts amounting to more than $1,000 can be more difficult to overcome and are an enjoyable time to seek additional help. This can be a real solution for relief for anyone carrying debt as small as $1,000 even up to hundreds of thousands of dollars. The best way to determine your eligibility and best debt repayment option is to arrange an appointment with a certified credit counselor who can thoroughly assess your individual financial circumstance.
3. When is it not the best option?
   No matter the option you choose, it is important to weigh your investment of money and time with the results you are being guaranteed. Make sure these costs will be worth the outcome. For example, if you can repay your debt on your own, seeking a service to do so for you is not a good financial investment. Generally, other options such as bankruptcy may be better for individuals who do not have the ability to meet the financial obligations of a debt management plan because of a lack of steady employment, an insurmountable sum of debt, or because creditors have moved beyond negotiation. While debt consolidation may not always be the best match for you, debt settlement, balance transfers, car title loans, and home equity lines of credit can come with a high cost and be ineffective or create even more debt. Therefore, we do not recommend them as helpful alternatives. We would advise, again, that individuals researching their options attend a free consultation through a credit counseling agency to accurately understand how they can take advantage of the many resources offered.

How do you consolidate credit card debt on your own? If your financial debts are fairly insignificant, you feel confident you can develop a repayment strategy, and you are ready to maintain the discipline necessary to pay your debts off on your own, your first step would be to gather creditor information and current balances for each account owed. It is wisest to choose one place to compile all your data such as a spreadsheet, whiteboard, or journal. You’ll want to list out your debts including the account name, the interest rate, the current balance, the minimum payment required, and the payment amount you’ve determined to pay. The order of this list will be based on which repayment strategy you feel will benefit you the most. Begin making monthly payments to each including one larger payment to the highest priority account. Be sure and verify monthly remaining balances with your creditors and write in these new balances wherever you are tracking progress. Once an account has been paid in full, it is important to reassign its payment to the next account with high priority. This aggressive approach is proven to be successful.

1. What should you do to stay out of debt? 
   The surest way to eliminate debt on your own is to combine an aggressive repayment strategy with a simplified budget. During your repayment process, it would be best to freeze all credit card usage or borrowing. You’ll find it nearly impossible to conquer a balance if you continue to add to it. Next, track your expenses every month. Do this to understand how much money is coming in and where every dollar goes when it leaves your bank account. Consider your purchases and weed out any unnecessary spending. Usually, you can modify spending on utilities, TV subscriptions, gas or transportation, clothing, groceries, dining out, and entertainment. Freeing up this money will create room for the necessary payments needed to get out of debt. This revised way of living will also ensure you will be able to save for medical and other financial emergencies and be less reliant on credit usage and borrowing on a daily basis.

Debt consolidation benefits

1. How it works
   Debt consolidation allows a client to pay down multiple accounts owed with one monthly payment. At Debt Reduction Services, clients first meet with a certified credit counselor to better understand their finances and assess their eligibility for a debt repayment program. Once repayment is determined to be feasible, negotiations with creditors are pursued by either the client or the credit counseling agency. Counselors and clients will discuss a repayment plan. Should the client agree to the terms, they will be enrolled in a DMP through which they will make one low monthly payment to be disbursed to their creditors. A client’s repayment process will last 5 years or less. During repayment, clients will be encouraged to review financial education webinars and articles provided.
2. How it can help
   This easy approach provides clients with honest counsel, organization, and accountability, three keys to success. Debt Reduction Services is also able to offer help in reducing fees and interest rates, as well as supply financial education and informative support, to guide clients along the way. Utilizing a debt management plan is unequivocally useful because it simplifies the process of repayment, supplies a proven method for success, and saves clients up to thousands of dollars in reduced fees, charges, rates, and because it often shortens repayment terms.
3. Example
   It’s easiest to visualize the impact if we use an example. If for instance, you attempted to repay $20,000 worth of debt on your own, after fees, interest, and a drawn-out repayment period as long as 20 years, it is likely you would have paid $60,000 in total. If, however, you apply consolidation along with lowered interest rates, even with program fees included, after five years your debt would be paid in full totaling only $23,000.
4. What Debt Repayment Can Help You Do? Aside from finding relief from paying off oppressive debt, consolidating your bills and completing a debt management program comes with several other benefits. As you pay off your creditors on time and according to terms, these acts will be reported to the credit bureaus. This, in turn, will improve your credit score. Additionally, even in the process of whittling down your outstanding balances, you will be working towards a healthier debt-to-income ratio. Individually or combined, these benefits can improve your chances of being approved for a car or home loan should that be a goal for your future.