The first thing to tell you if you find yourself facing more debt than you can afford to repay is you are not alone. Indeed, financial problems have struck many people in the wake of the pandemic, and the overall confusion it brought about. Whether or not your dire situation is related to the global hiatus, dealing with it on yourself might prove too much of a challenge. Should you mismanage the process, you might face legal liability. Debts seem to inevitably drain your budget, too, making settlement even a more daunting prospect.
The above concerns are exactly what is driving an increasing number of debtors to engage in dedicated relief programs such as Debtstoppers’. This article explores what’s good and what’s not so good about the debt settlement options that people are offered in 2021, with a focus on who is likely to benefit from what intervention.
The Perils of Being in Debt
People who owe considerable sums of money to other individuals and/or institutions often have difficulty settling the debt in time. Failure to repay the due amount can trigger legal (or not so legal) proceedings pregnant with all kinds of risk to the person’s property and financial standing, including the following:
- Foreclosure. This term refers to a situation when real estate used as a collateral for a loan is forcibly sold to ensure repayment, meaning the owner will most probably lose his or her home because of the debt.
- Repossession. The word, often shortened to repo, means the self-help practice of taking property that you own away from a debtor currently having possession of it, usually with future sale in mind. This procedure is most often applied to cars and trucks.
- Wage garnishment. This means part of your salary is withheld and sent directly to your creditor rather than being handed out to you.
- Harassment by creditors. Indeed, debtors are likely to feel like they are being hunted for at some points. The specific tools and practices depend on the creditor, but your overall experience will most probably be unpleasant, to say the least.
- Loss of credit score. Especially true when it comes to credit card debt, this side effect can cast a long shadow onto your future even after your situation improves.
Relieving the Burden
The US government has introduced amendments to its Bankruptcy Code to alleviate the load on the country’s citizens in debt. In particular, new sections have been included, known as Chapter 7 and Chapter 13, allowing individuals to file for bankruptcy when debts pile up beyond the point where they can repay them.
Under Chapter 7, you are expected to sell part of your property in order to settle the debts. This is often the most viable option for people with limited income, since it still prevents the losses associated with failure to repay your debt. Even more optimistically, Chapter 13 promises to let you keep your property through reorganization, i.e. establishing a new repayment plan.
Unfortunately, applying for bankruptcy under either chapter can be complicated, especially when your financial records are not particularly orderly or the situation is otherwise confusing. Debt relief companies will undertake to represent you in court and collect all the necessary papers. Ideally, the experts start by analyzing your debts to find the way out that’s associated with the lowest costs.
The Benefits and Costs
A debt relief program can be extremely beneficial provided that it’s professional. The program should be tailored to your needs as a debtor, with enough consideration given to your income and structure, expenditures, and other relevant aspects.
Probably the biggest advantage of quality debt relief services is that they save your property and time. By delegating your responsibilities to an expert, you will finally stop getting aggressive collectors’ calls and forget about huge tax reports. The decision also increases your chance of resorting to the best solution possible based on your situation.
Quite naturally, the benefits come at a cost. The relief is provided on a paid basis, so it’s advisable to look for a company that offers free consultation prior to signing an agreement. This way you will know you can rely on the professionals.