By Manuel Tovar, June 23 – Hispanic Solutions Group
The programs of debt relief they can help you get out of debt. But it is a decision that must be made with care. It is not necessarily a perfect solution and there may be some major trade-offs. Before starting with the debt relief, our team of Hispanic Solutions Group suggests three important things to consider.
Debt consolidation loans or lines of credit and 0% balance transfer offers can provide credit card debt relief. But consider the cost involved. Ideally, debt consolidation results in a lower interest rate. A lower APR means that more of your monthly payment goes to principal so you can pay off your debt faster. It also accrues less interest during its repayment period. If you are interested in how to consolidate debt, first consider the rates you may qualify for based on your credit score. And, if you are interested in something like a debt management plan, ask if a rate reduction is a possibility when setting payment terms.
There may be fees associated with some debt relief options and it helps to keep these in mind when deciding if the cost is worth it. For example, credit counselors may or may not charge a fee to help you create a budget and a spending plan. With debt consolidation loans, you have to be careful about loan origination fees and prepayment penalties. If you are using a 0% APR balance transfer credit card to consolidate debt, then you may pay a balance transfer fee. If you are interested in a debt management plan, you may have to pay a monthly fee to enroll. And companies that negotiate debt settlement may also charge a fee for their services, sometimes between 15% and 25% of the amount settled or forgiven. Since fees can add up to the total amount you need to repay, it is important that you know what you are paying up front and how you can add up in the long run.
When you’re interested in debt relief services, whether it’s credit counseling, a debt management plan, or debt forgiveness, it’s important to make sure the company you work with is legitimate. Otherwise, you risk being victim of a scam debt relief. You also need to understand the differences, as described above, between debt consolidation, debt management plans, and debt settlement. Not all debt relief providers use these terms clearly enough that you understand what you’re getting into, unless you read or listen to them very carefully.
When comparing debt relief companies, be aware of the following red flags:
- Demands for fees that must be paid before services can be offered.
- Lack of transparency when explaining what the company does or provides
- Requests for access to personal or banking information
- Promises or guarantees that seem too good to be true.
We also inform you that the Consumer Financial Protection Office (CFPB) maintains a database of consumer complaints regarding debt relief companies and other financial service providers. Count on our support and advice.
We invite you to follow our social networks: LinkendIn, Facebook, Twitter and Instagram to find more information related to finances. Also on our YouTube channel The Credit Channel to learn how to improve your credit. If you need help in repairing your credit, disputing debts that do not belong to you, or other services, call us at (612) 216-1599.