The truth about alternative debt reduction services

At Think Debt Relief, we’re here to help you reduce your debt by providing the most complete debt settlement information, along with guidance on all your debt relief options. That way, you can rest assured the choice you make for debt relief is the one that’s right for you.

Consumer Credit Counseling and Debt Management Plans

Think Debt Relief recognizes the value of credit education and behavior modification that can be provided through either a debt settlement program or credit counseling. Our credit education provides you with tips, tools, and advice for how to make smart decisions when using credit, so that you don’t find yourself struggling with overwhelming debt again later.

Consumer credit counseling encourages you to make continued monthly debt payments by setting up a debt management plan that can reward you with lower interest rates and lower monthly payments. Unlike debt settlement, however, there’s no principal reduction involved in a credit counseling debt management plan, so you’ll have to pay 100 percent of what you owe.

For some people, credit counseling may be a better option than debt settlement, which is why Think Debt Relief has partnered with Amerifree Credit Counseling. Our consumer credit counseling professionals will work with you to set up a debt management plan that can help solve your debt problems now, while providing credit counseling, education, and advice on how you can prevent more debt problems in the future.

Debt Consolidation

Debt consolidation requires that you take out a single loan, which you use to pay off all your debts. Debt consolidation can be a tempting choice when you have a lot of monthly bills, several different creditors, and multiple different interest rates because the result is one monthly payment to one creditor at a single interest rate.

With a debt consolidation loan, your new monthly payment may even be lower than what you owed before, each month, on all your bills added together.

But there are several drawbacks to debt consolidation:

• A debt consolidation loan is yet another debt you’ll have with yet another creditor. 
• Your debt isn’t reduced when you consolidate, it’s simply moved from one creditor to another. You still owe the same amount you did before, just to a different creditor.
• Although your monthly payments may go down with a debt consolidation loan, these lower payments are typically the result of your debt being spread out over a longer period of time. You may get several more years to pay off your debt consolidation loan, but that means you could actually end up spending thousands of dollars more in interest to pay your debt off.
• Debt consolidation loans are usually secured, which means you’re required to use your home, car, or other personal assets as collateral. Collateral is basically your lender’s insurance on your promise to pay: Miss your payments on your debt consolidation loan, and you could lose your home, car, or other collateral to your lender. (You don’t run this same risk with debts like credit cards, for example, which are unsecured.)
• Secured loans can never be negotiated or lowered without refinancing — yet another loan on your credit — which is the opposite of what debt settlement can accomplish.

At Think Debt Relief, we recommend you deal with your debt either by immediately reducing your interest rates and payments through a credit counseling debt management plan or by settling your balances for less than what you owe through a debt settlement program, paying less over a shorter period of time — not by spending more money over a longer period of time just because at first glance, a smaller monthly payment might seem better.

Bankruptcy

At first, when you’re facing overwhelming debt, bankruptcy may seem like your best or only option because you think it means your debts will get wiped out and you’ll be able to start over fresh.

Unfortunately, many people who had that same thought when they declared bankruptcy are now facing an uphill battle to pay off debts that weren’t written off and to reclaim their credit, qualify for loans and credit cards, buy a house or a car, rent an apartment, or in some cases, even get a job:

• Bankruptcy can leave a terrible stain on your credit report for 7–10 years. 
• A bankruptcy can make it difficult for you to get an affordable interest rate when you try to buy a home or a car or apply for some other form of credit.
• A bankruptcy can stay on your official court records for more than 20 years — sometimes for the rest of your life — and can hurt your chances of being approved or hired when you apply for a job or a loan or try to rent an apartment.
• New stricter bankruptcy laws make it much harder for your debts to simply be wiped out in a bankruptcy. You may only be eligible to go into a repayment bankruptcy (a Chapter 13 bankruptcy), which requires you to still repay some or all of your debt on a payment plan.
• If you do qualify for the type of bankruptcy that wipes out your debts (a Chapter 7 “liquidation” bankruptcy), you’ll be required to sell off all your property that isn’t protected by law.
• Bankruptcy can be embarrassing and damaging to your reputation. There’s a negative social stigma associated with bankruptcy that can follow you around like a dark cloud for years.

Bankruptcy is a very serious decision, with consequences that can last for a long, long time. Here at Think Debt Relief, we recommend that you consider bankruptcy only as a last resort.

If you’re thinking of declaring bankruptcy, you should speak with a lawyer before making any decision. And Think Debt Relief can help you with that too.

No matter how much debt you’re facing, Think Debt Relief is here to help, and we want to make sure you make the debt relief decision that’s right for you. As we work with you, if it seems like bankruptcy may be a better option for you in your situation than credit counseling or debt settlement, we’ll refer you to a local attorney through our national attorney network.