Manage Debt On Your Own Or With A Credit Counseling Agency
It is possible to manage your debt on your own. This option can be difficult to navigate and requires self-discipline and organization. Luckily, strategies such as the debt snowball and the debt avalanche can help.
There are also little things you can do to make your debt easier to manage, including sticking to a budget, starting an emergency savings account and taking measures to reduce your monthly bills. To make this process easier, it could be beneficial to work with a . These agencies take a deep look at your financial situation and provide recommendations and strategies for moving forward.
Pros Of Debt Consolidation Programs
- These programs are not a loan, so your credit score doesnt factor into your qualifications.
- Reduced interest rates can help lower monthly payments.
- Making payments on time can help improve your credit score.
- A credit counselor can help you develop a monthly budget.
- Education programs can help you set financial goals and make a plan for staying out of debt.
Navient Agrees To $185b Student Loan Settlement With States
Navient, one of the largest student loan servicers in the country, announced Thursday it has reached a $1.85 billion settlement with more than three dozen states in an effort to resolve allegations of predatory lending and deceptive practices over more than a decade.
The resolution includes $1.7 billion in private student loan debt cancellation owed by about 66,000 borrowers nationwide and originated largely between 2002 and 2010 and $95 million in restitution for borrowers, a bipartisan coalition of state attorneys general said.
Pennsylvania Attorney General Josh Shapiro, who spearheaded a lawsuit against Navient in 2017, said the loan management company steered borrowers further into debt through forbearance practices, which allowed borrowers to temporarily postpone repayment while still being charged interest. He also accused Navient of engaging in the use of risky subprime private loans for students to attend for-profit colleges, some with dubious track records, while knowing those borrowers would be unable to repay their debts.
Navient repeatedly and deliberately put profits ahead of its borrowers it engaged in deceptive and abusive practices, targeted students who it knew would struggle to pay loans back, and placed an unfair burden on people trying to improve their lives through education, Shapiro, who co-led the settlement, said in a statement.
Under the agreement, Navient is denying it violated consumer protection laws or caused borrowers harm.
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The Pros And Cons Of Debt Management Plan Versus Government Debt Consolidation Programs
If youre struggling to repay your student loans, government debt consolidation programs may be a helpful option. Most federal loans are eligible for Direct Consolidation, including Direct, Stafford, Perkins loans, and more.
With government debt consolidation programs, youll consolidate multiple loans into a single new loan, with a new interest rate and payment terms. With just one check to write each month, youll find it easier to keep track of your loan payments. Additionally, a government debt consolidation plan can lower your monthly student loan payments by increasing the amount of time you have to pay back the loan and giving you access to other repayment options. If your original student loans have variable interest rates, government debt consolidation programs can convert your debt to a fixed interest rate, providing more predictability and possibly a lower monthly payment.
One of the drawbacks of government debt consolidation programs is that if your previous loans had benefits like rebates, interest rate discounts, or forgiveness, you might lose those benefits after consolidating.
Explore what a Debt Management Plan can do for you.
What Happens To Companies Advertising Government Debt Consolidation
Despite this product not existing, some companies still use phrases such as government debt consolidation in their adverts and across their pages to mislead people possibly in an effort to make themselves seem more authoritative than they actually are.
Regulators, such as the Financial Conduct Authority, have noticed and taken necessary steps against these organisations. Penalising those falsely advertising government debt consolidation, this at least means the misleading adverts will hopefully become less common.
If you do see a company saying their consolidation loans are endorsed by the government, we advise treating them with caution. Chances are, they are just trying to mislead you.
Debt is a very personal matter you want a group to help you tackle it which at least has your best interests in mind.
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Federal Student Loan Forgiveness
If you have federal student loans, you may be eligible for some form of loan forgiveness. These are the three most common types of loan forgiveness:
- Public Service Loan Forgiveness : Certain jobs offer student loan forgiveness. For instance, if you work for a nonprofit organization or the government, you may qualify for PSLF. With PSLF, your loan balance is forgiven after you work for a qualifying employer for 10 years while making payments on your loans. The forgiven balance is not taxable as income.
- Income-driven repayment plan forgiveness: If you cant afford your payments, you may be able to lower them by applying for an IDR plan. And, after 20 to 25 years of making payments on your loans, the remaining balance is forgiven. However, the forgiven amount is taxable as income.
- Total and Permanent Disability Discharge: If you have a complete and permanent disability, you can qualify for loan discharge. If your loans are forgiven after Jan. 1, 2018, the remaining balance is not taxable as income.
There Are No Government Debt Consolidation Programs For Credit Cards
One type of debt that the government doesnt offer relief for is credit card debt. There is no government program that forgives or even minimizes the burden of paying off your credit card balances. There are, however, 5013 nonprofit consumer services that work with you to provide debt relief. These agencies are funded through grants from credit card companies. They provide funds to these agencies in order to help rehabilitate customers that have gotten overextended with credit.
Finding the right debt relief programs for your needs
Depending on the type or types of debt you have, there may be a government debt consolidation or relief program that you can use. And even if you cant use a government program, there are plenty of programs out there that can help you get out of debt. Identifying programs that you can qualify for is usually the first step to making a real plan to eliminate your debt. A can help you with this.
Get a free debt evaluation to learn which debt relief programs you can use to get out of debt in the way that best to fit your budget and goals.
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The Risks Of Consolidating
Getting a new loan or varying an existing loan to pay out a number of other loans comes with some risk. Some of the key ones are listed below.
Longer to pay off
The main downside of a consolidated loan is that it usually takes much longer to repay and that means it may cost more in the long run.
Fees, charges and interest rates
Make sure that you check the fees, charges and interest rate of the new loan it may work out more expensive in the long run than if you just kept paying off your multiple debts.
Unsecured into secured
Before you turn all your unsecured debts into a secured debt, remember that the asset given as security will be on the line if things go wrong. You may also be turning short-term debt into long-term debt. If your home is jointly owned with someone else, you may have to pay the debt if they cant.
Single borrower debt to joint debt
Take care and make sure you do not take on your partners debts in a debt consolidation. Where there is a joint debt, you may end up repaying the debt in full.
Only one lender to negotiate with
When you consolidate into one loan you will have only one lender. If you get into financial difficulty again, you can only negotiate with them.
Government backed schemes
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List Of Free Debt Consolidation Programs In The Uk
Ive found the UKs cheapest debt consolidation programs, with the least possible APR. Let me share that with you.
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Dealing With Debt Collectors
Federal law dictates how and when a debt collector may contact you: not before 8 a.m., after 9 p.m., or while youre at work if the collector knows that your employer doesnt approve of the calls. Collectors may not harass you, lie, or use unfair practices when they try to collect a debt. And they must honor a written request from you to stop further contact.
What About Government Approved Debt Programs
You may have also seen terms like government of Canada debt relief grants or free Canadian government grants to pay off debt. While these look appealing and might make you think there are some ways for you get a deal when dealing with your debt, sadly, this is not the case.
Any company, individual, service, or program that claims they are government approved is often embellishing their reputation or simply misleading you. As was mentioned earlier, the government doesnt offer any debt relief services and doesnt publicly approve or endorse any either.
What these companies often mean by claiming to be government approved is that they have obtained a license from the government or that they are offering a consumer proposal, which is defined within the Bankruptcy and Insolvency Act.
So while many of these services are regulated or licensed by the government, it doesnt mean that they are approved by them. Simply put, companies will use those buzz words as a way to make their option seem like the more official, prestigious, and best one for people who are struggling with debt.
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Government Grants To Pay Off Personal Debt
When a low-income person has many expenditures but he is not capable to handle all the expenditures in his low income, he thinks about lending some money. But lending the money is means that they have to return the money and with the interest, which is not possible for them. And in the end, they look for grants from the government. If there is any grant that can help them financially to pay off debt. But people also doubt in their mind about those government grants that they need to pay back these debt relief grants by the government?
So, we tell you, that like the other loans or debts, you do not need to pay back the grant amount to the government. Because the government does not expect to take it back from you, they just want to help you in your tough time. So, it is a powerful tool for people who are facing life difficulties which are related to finance. They can use this financial grant from the government without any worry of payback and fulfill their financial needs.
In this article, you will get information about the various personal loans for the people which are offered by the government. The most interesting thing that the individuals do not need to pay it back. So, continue with the article and get information about various personal loans which are helpful for you.
Can I Enroll In Debt Consolidation Programs Online
Enrolling online may actually be the easiest way to take advantage of a debt consolidation program. First, youll authorize the agency to access a list of your debts and payment information. Then, youll gather and provide information about your income and expenses, and answer questions about your goals and timelines to be debt free. If you qualify, youll be approved.
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Extension For Federal Payment Suspension
Joe Biden extended the federal loan payment suspension and interest waiver for the third time on December 22, 2021. As a result, until May 1, 2022, federal student loans would be free of interest.
There was no mention of a loan cancellation or forgiveness program in that announcement. But President Biden encouraged borrowers to play their part in preparing for repayment.
After the Administration stated in August that its announcement would be the final extension of the CARES Acts loan interest waiver, it came as a bit of a surprise.
Jen Psaki, White House Press Secretary, said Biden had not decided when he was asked the day before about the possibility of the president enacting more loan forgiveness or extending the payment freeze.
Borrowers are waiting for information about significant student loan forgiveness, as promised by President Biden during his campaign. And its uncertain whether the payment moratorium will be prolonged beyond August 2022.
The Biden Administration has chosen a gradual approach to student loan relief as it investigates its legal power to seek larger loan forgiveness schemes without congressional approval. It continues to pursue its agenda with slim majorities in Congress.
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Paying Off Your Debts
You can pay your debts in instalments by setting up:
- a Debt Management Plan which is an agreement with your creditors managed by a financial company
- an Administration Order when youve had a county court judgment or a High Court judgment against you for debts under £5,000
- an Individual Voluntary Arrangement which is managed by an insolvency practitioner
You can also get temporary protection from your creditors through the Breathing Space scheme, while still making repayments. Youll need to apply through a debt advisor.
In Scotland you can arrange a Debt Payment Programme from the Debt Arrangement Scheme.
You may also have the option of reaching an informal agreement with your creditors.
Debt Settlement As An Alternative To Bankruptcy
Government Programs for Debt Relief
Filing for Chapter 7 or Chapter 13 Bankruptcy can plague you with a set of challenges, such as lawsuits, monetary judgments, or garnished wages which you may want to avoid, not to mention the long term impact on your credit score which it may incur. If you want to avoid bankruptcy, debt settlement is a viable and recommended alternative by the Federal Trade Commission. Under debt settlement, a debtor can receive a lump sum agreement or installment through which he or she will pay off debt at a reduced, fractional rate of the total account balance, perhaps at around half, or more or less depending on the debtors situation. Though debtors can hire a firm to help with creating a debt settlement plan, the FTC warns against for-profit firms as they are often out to scam debtors. Debtors can create their own self-managed debt settlement plan or look into free credit counseling agencies.
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Know Where To Get Help
If you’re having trouble paying down your debt on your own, get help.
If you need help you can contact:
- an accredited not-for-profit credit counsellor
- a financial advisor
They may suggest you explore other community and professional services first.
With their help, you’ll be able to:
- evaluate your current debt situation
- determine your present and future needs
- make a budget
- find ways to pay off the debt
Before you sign up for services to get help to pay off your debt, it’s important to explore your options and compare the different services offered.
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Best Interactive Program: Freedom Debt Relief
We chose Freedom Debt Relief due to the fact it offers an interactive client dashboard that lets clients track their progress.
Free consultation and no upfront fees
Client dashboard lets you track your progress
Less transparent results reporting
Freedom Debt Relief has been in business since 2002 and currently employs over 2,000 highly trained debt experts and professionals. It starts clients off by offering a free consultation with a certified debt consultant who can help them talk over their debts and what they hope to accomplish. From there, they craft a personalized debt settlement plan that asks you to save a specific amount in a separate account to use for debt settlement later on.
One feature that helps Freedom Debt Relief stand out is its interactive process. Once you sign up for a debt settlement program and begin making deposits, youll qualify for a client dashboard that you can use to stay up to date on your program. This dashboard lets you see how much you have saved, how much you owe, and any progress Freedom Debt Relief has made negotiating debts on your behalf.
Freedom Debt Relief says its clients dont pay any fees until work is done on their behalf. By the end of their debt settlement programs, customers pay a fee equal to a percentage of the amount of debt they enrolled in the program. While Freedom Debt Relief cannot guarantee it will settle your debts, it claims that many of its clients wind up paying significantly less than the amounts they once owed.