Consumer Debt in America

In the first three months of 2020, household debt in America rose to $14.3 trillion and 47% of households carry some sort of credit card debt. Up to 40% of Americans can't pay more than the minimum payment on their credit cards. Almost one-quarter (23%) of card holders have added to their credit balance as a direct result of the Covid-19 pandemic.

What are my Options for Debt Relief?

• Pay Off Your Debt In Monthly Installments
• Work with a Debt Settlement Company
• Qualify for a Debt Consolidation Loan
• Join a Debt Management or Credit Counseling Program
• File for Bankruptcy

Pay Off Debt In Monthly Installments

If your debt is manageable, you can pay off your debts in monthly installments and manage the entire process on your own. You should keep in mind that if you can only afford to make the minimum monthly payment, you may be in for a long ride.A $2,000 credit card balance that carries an 18% annual rate can take just over 30 YEARS to pay off in you only make the 2% minimum monthly payment every month.

Work With a Debt Settlement Company

Debt settlement is an increasingly popular option. Freedom Debt Relief, our top rated debt settlement company, negotiates with your creditors on your behalf.  The goal is to reduce the total amount you owe, have the creditor take a loss on the remaining debt balance, and agree to a new deal with creditors to make monthly payments over a 2 to 5 year period. A debt settlement program will negatively affect your credit score but it will allow you avoid bankruptcy and your credit score will likely improve once you complete the program.

Qualify for a Debt Consolidation Loan

A debt consolidation loan is the process of combining many unsecured debts (credit cards, medical bills, etc.) with high interest rates into one loan with a lower monthly payment. If your goal is to become debt free, a good debt consolidation loan should bring you monthly savings and help you improve your credit score. Fiona operates an online lending marketplace that will let you know in just a few minutes what type of debt consolidation loans you qualify for.

What is a Debt Management Program?

A debt management program is somewhat similar to debt settlement program. A fundamental difference is that you must hand over control to the agency and allow their representatives to negotiate and make the payments on your behalf.It will also negatively affect your credit score but will allow you to avoid bankruptcy.

Bankruptcy

Filing bankruptcy is generally the last resort. If you are unable to pay your debts and you don't see any other way out, you should contact a bankruptcy professional to get legal advice. You should keep in mind that in a bankruptcy, you are at risk of losing all your assets and possessions. A bankruptcy will negatively impact your credit score for the long term and it is up to the court to decide if you qualify for a Chapter 7 (entire debt wiped out) or a Chapter 13 (a percentage of the debt will be wiped out).