If you are in debt, you will often have people lining up to help you out, many times all in an effort to separate you from even more money than you had to pay due to your debt problems in the first place. Among the many types of debt solutions out there are debt relief programs. A debt relief program works to help you pay down your debts all at once for less than what you actually owe. Typically, a debt relief program is only available for unsecured debts, those debts the repayment of which is not tied to any sort of underlying asset. You need to be wary of the many debt relief companies that may try to charge you upfront or claim all sorts of success, but cannot produce anything to substantiate their claims. Debt relief is a serious process that requires you to do some serious research on the background of whatever company you choose to work with.

What kinds of debt can I settle with a debt relief program?

Unsecured debts are typically the only type of debt that can be paid through a debt relief program. These would include credit card debt, payday loans, personal loans, and any other type of financing that does not have some underlying asset tied to the repayment of the debt. Secured debts are those where there is an underlying asset that serves as collateral, or backing, that the creditor will be repaid. In the case of a mortgage, this would be the house that the mortgage is extended upon and, in the case of an auto loan, it would be the vehicle itself. Secured debts typically cannot be included in a debt relief program because there is no incentive for secured creditors to accept less than the full amount of secured debt because, if you default (i.e. stop paying) on secured debt like a mortgage or car loan, then the lender can foreclose on your house or repossess your car. That is not true with a credit card or personal loan.

What’s the difference between an original creditor, a debt buyer, and a collection agency?

You may be dealing with different types of creditors when looking at your entire financial picture. The original creditor means the credit card issuer or whoever extended your financing originally. A debt buyer purchases your debt from the original creditor, often in a bulk sale of other delinquent (i.e. late) accounts for pennies on the dollar. Collection agencies are outside organizations that work on behalf of the owners of debt to try and collect on debts. They are also much more aggressive in their debt collection efforts, which is one reason they are much more heavily regulated by state and federal law in what they can and cannot do when attempting to collect a debt from consumers than other types of creditors. It is important to know whether you are dealing with each type of different creditor when working with a debt relief company because that will affect what strategy and how much of a savings you can expect from each.

What is it like to go through Debt Relief?

Debt relief can be a shock to someone who has never been through the process before. It typically involves stopping making payments to all your individual creditors and paying one amount to the debt relief company, which will then distribute it among your creditors according to the terms the debt relief company was able to negotiate with each individual creditor. In that sense, debt relief can be very liberating because someone else takes the reins and manages dealing with your creditors and negotiating with and then distributing your payments among those creditors for you. Debt relief programs themselves can vary in length depending upon how much debt you have and how many of your creditors agree to participate in your debt relief program, although most of them will last for years if you have a significant amount of debt.

Debt Relief Company Scams: Red Flags to Avoid When Considering Debt Relief Companies or Programs

If a company tries to charge you upfront for “enrolling” in its debt relief program, this is not a reputable debt relief company. Look to outside organizations that may keep track of businesses and their track records and rate them on their commitment to their customers. The Better Business Bureau, which tracks consumer complaints for virtually every type of business, will have records relating to how many complaints have been filed with it concerning any debt relief company you are considering working with. Ensuring that what debt relief company you choose is a member of the American Fair Credit Counsel, an outside organization devoted to protecting consumers from unscrupulous debt relief companies is also extremely important. These outside organizations do the work of ensuring that a debt relief company is reputable and works in the best interest of its customers. Given the number of companies that try to prey on unsuspecting borrowers, this is particularly important.   

Contact Signature Servicing if You Are In Debt and Need Assistance 

If you are in debt and do not know where to turn, please contact us at Signature Servicing at 844-440-7654 or email us at info@signatureservicing.com. We know financial matters are a personal subject, so we take your privacy seriously. We can assist by giving you personalized advice as to your own unique solution and customizing a program to help you in getting out of debt. You do not need to let debt run your life; you can take charge and chart your own financial course.