Sign in

Debt Relief: What Is It and When You Should Seek It

Erric Ravi
Debt Relief: What Is It and When You Should Seek It

Debt relief, also known as Debt cancellation, is the rearrangement of debt in any way possible to give the party who owes the money some relief, either entirely or partially. It can also be defined as the slowing or stopping of the growing debt owed by individuals and corporations. Debt relief can have many different forms, including reduced outstanding principal balance (partially or totally), lowered interest rate on past due loans, or lengthening the loan's duration. 

When Should One Seek It? 

One should seek debt relief when they have no means to pay their unsecured debts. It could comprise obligations made by excessive and irresponsible use of credit cards, medical debts, or other debts for which one has no property as collateral. You can also seek debt relief when you're behind, or about to fall behind, on bill payments, when you're facing severe consequences for overdue debt, such as home foreclosure or vehicle repossession. Additionally, you can opt for debt relief when you struggle to choose between covering monthly debt payments and necessities or when you've to avoid answering calls or opening mail for fear of being contacted by debt collectors. 

Some of the debt relief options that you can consider are:

1. Credit Counseling

An expert will go over all of your debt-reduction options when you work with a nonprofit credit counselling organisation. To give you individualised advise for a plan of action, a credit counsellor may evaluate your unique situation, taking into account your budget, credit history, and other factors.

2. Debt Management Plan

To enrol in a debt management programme, you must first have a credit counsellor authorise you. Depending on your individual creditors, your debt balances, and other factors, such as whether you're current with your payments or not, you might be eligible to enrol in a debt management program.

Enrolling in a debt management programme may lead to a more manageable repayment plan, but there are some costs involved.

3. Debt Consolidation 

A new loan or line of credit must be obtained in order to consolidate debt. This makes it possible for you to combine multiple bills into one successfully. Debt consolidation aims to make debt payments more manageable or affordable.

4. Debt Settlement

You must haggle with your creditors to pay less money than you should in order to settle your debt. You can either attempt to participate in these negotiations on your own or enlist the assistance of a debt reduction organisation like FREED.

A debt settlement company will take over the management of your debt accounts, gather your monthly payments and hold them in a savings-type account, and finally offer some of the money to your creditors as lump-sum settlements.

We recognise that accruing debt can be quite stressful, but we are here to support you as you work toward financial freedom. With the help of the knowledgeable staff at FREED, one of the top debt relief firms in India, the entire debt process is simplified.

Remind yourself that falling into a financial hole does not spell doom.

Erric Ravi
Zupyak is the world’s largest content marketing community, with over 400 000 members and 3 million articles. Explore and get your content discovered.
Read more