Introduction
Debt can be a significant challenge that threatens people’s financial stability and well-being. It has become even more challenging in recent years, as the global economy experiences prolonged difficulties. However, many people do not know where to turn for help with their debt problems. Thankfully, there are many free debt advice options that people can access to help them manage their financial situation better. In this article, we will focus on three types of free debt advice, providing detailed information on each option.
Credit Counseling
Credit counseling is a process in which a financial professional provides advice and guidance to individuals facing financial difficulties. The professional will typically start by reviewing the individual’s income, expenses, and debt. They will then make a recommendation on how to manage their debt, such as creating a budget or consolidating their debt into one loan.
Credit counselors can help individuals negotiate with creditors to lower their interest rates or work out a payment plan. They can also offer advice on reducing expenses, increasing income, and finding additional resources for financial assistance.
Credit counseling is often offered by nonprofit organizations and government agencies. For example, the National Foundation for Credit Counseling (NFCC) is a nonprofit organization that provides credit counseling services to individuals facing financial difficulties. The NFCC has an extensive network of experienced credit counselors throughout the U.S. who can help individuals with debt management, credit counseling, and financial education.
Debt Management Plans
A debt management plan (DMP) is a program in which a credit counseling agency works with an individual’s creditors to make a realistic payment plan. A DMP is designed to help individuals pay off their debt over time and avoid bankruptcy.
When an individual enters into a DMP, they make a single payment to the credit counseling agency, which is then distributed to the creditors. The credit counseling agency negotiates with the creditors on behalf of the individual to reduce the interest rates or late fees, which helps the individual pay off their debt more quickly.
DMPs typically last for three to five years, depending on the amount of debt and the individual’s income. During this time, the individual must make consistent payments to the credit counseling agency. The individual must also agree not to use credit cards or take on new debt while in the DMP.
Many credit counseling agencies offer DMPs as part of their services. The NFCC provides DMPs as well.
Debt Settlement
Debt settlement is a process in which an individual negotiates with their creditors to reduce the amount of debt they owe. The individual will typically offer to pay a lump sum or a lower amount than what they owe in exchange for the creditor forgiving the remaining balance.
Debt settlement can be a risky option, as creditors are not obligated to accept the offer. Additionally, debt settlement can negatively affect the individual’s credit score and result in penalties and taxes on the forgiven debt.
It is important to note that debt settlement is not the same as debt consolidation or credit counseling. Debt consolidation involves combining all debt into one loan, while credit counseling involves working with a professional to manage debt.
Debt settlement is typically offered by for-profit companies that charge fees for their services. The Federal Trade Commission (FTC) regulates the debt settlement industry and provides resources for individuals looking to navigate the process. The FTC recommends that individuals consult with a credit counselor or bankruptcy attorney before considering debt settlement.
Conclusion
Debt can be a significant burden for individuals and families. However, there are many free debt advice options available to help manage the problem and prevent financial ruin. Credit counseling, debt management plans, and debt settlement are three popular options that can help individuals manage their debt and avoid bankruptcy. It is important to research and evaluate all options carefully before selecting one, as each option has its advantages and disadvantages. Additionally, it is recommended to consult with a financial professional or government resources to ensure that individuals receive the best advice possible.
What is Debt Order?
Debt Order is defined as the restructuring and reorganization of the individual debt in possession of the debtor in questions; while the nature of debtors may range from private, consumer debt to commercial and federal debt, a multitude of debt order resources exists in order to assist individual debtors in their respective efforts to achieve debt relief.
Debt Order – oftentimes referred to as ‘Debt Adjustment’ will typically take place in the event that an individual or entity has found himself or herself to be in a state of financial insolvency:
Debt Order through Consolidation
Individuals seeking debt order through debt consolidation may be allowed the opportunity to combine the entirety of their respective debt into a single debt requiring repayment:
Within the realm of debt management and financial assessment concerning the terms and conditions of the process of Debt Order, the analysis of the nature of the debt requiring order typically ranges between Secured and Unsecured Debt.
Secured Debt is debt incurred through the furnishing of collateral on the part of the debtor, examples of which are mortgages and car payments – Unsecured Debt is debt incurred absent of secured backing, which typically consist of consumer and credit card debt.
Debt Order through Settlement
Debt Order achieved through debt settlement allows an individual or entity to relieve them of individual debt through a repayment plan that has been adjusted with regard to the gross amount of debt requiring satisfaction:
In certain cases, this type of settlement will allow for decreased gross amount for repayment, which will vary between the requirement for immediate payment and a structured, scheduled payment plan.
Other circumstances may result in the organization of a repayment plan through Debt Order requiring the debtor furnish smaller payments over the course of the life of the debt in question.
Debt Order through Bankruptcy
Bankruptcy is a legal instrument defined as a financial state within which the respective debts belonging to an individual or entity exceed the gross valuation of assets, monies, and property in their possession; in the event that an individual debtor has been made aware that filing for bankruptcy is the most viable option of debt order available to them, they are encouraged to undertake the hiring of legal counsel:
An attorney specializing in both debt resolution and bankruptcy should ensure that the adherence to this legal process is managed properly; the adherence to bankruptcy legality and protocol is of the utmost importance – mistakes, oversights, and misfiling can prove to be costly for the individual not versed in debt management and resolution.
Although the prospect of spending money in the midst of bankruptcy may appear to be counterintuitive at first glance, this type of debt order process through bankruptcy involves stringent legal protocol and practices.
Attorneys may be available for hire on the basis of a sliding scale in order to meet your financial needs and abilities; in other cases, pro-bono and non-profit legal assistance may be made available to eligible applicants with regard to the investigation process of Debt Order resources.
