Credit forgiveness programs sound pretty simple, but they often come with consequences that catch people off guard. Understanding what credit forgiveness entails will help you make an informed decision when trying to tackle debt.
What is Credit Forgiveness?
Unfortunately for everyone who has found themselves with out of control debt, credit forgiveness is not as worry-free as it may sound.
Credit card companies are in business to make a profit.
While they may sell your debt to a collection agency or perhaps be willing to negotiate on the amount owed, they are unlikely to forgive the entire debt outright. Such a drastic outcome requires more drastic measures, such as filing for bankruptcy.
Instead, the creditor (or collections agency) will agree to accept a lower total payment for the assurance that no monthly payments will be missed. So if you owed $20,000, they may agree to accept $15,000 instead. This is the total you will pay interest on, so the lower the better. However, even this forgiveness can remain taxable, meaning you could still owe taxes on the ‘forgiven’ $5,000.
What Other Options Do I Have?
If you are struggling with debt and unsure of what steps to take to improve your situation, you are not alone. Millions of people face the same problems and have similar concerns. It’s good to know that there is more than one option when it comes to debt relief.
While some companies may encourage you to take out new loans or transfer balances, these options are not in your best interest.
Taking out a new loan allows you to get further into debt, and thus will never get you out of debt.
If you can’t pay the loans you have now, how will you pay another loan designed to keep you paying interest?
Before you take action to deal with your current debts, you should first speak with a certified credit counselor. They are trained to handle problems just like the ones you are facing and have experience navigating the process of debt management. Don’t try to negotiate with your creditors on your own.
How Can CreditGUARD Help?
After reviewing your finances and unsecured debts, we will talk with your creditors on your behalf to lower your payments and reduce your outstanding interest. By getting a lower monthly payment that you can afford, you will be able to craft a manageable budget that works for you.
The collection calls and late fees will be a thing of the past. Our counselors will continue to provide credit counseling and financial education to help you remain debt free as you move forward.
If you are looking to speak with a certified credit counselor, give CreditGUARD a call today at [cga-phone]. Your confidential consultation will enable one of our experienced counselors to determine which solution will be right for you.
While a credit forgiveness program might look good on the surface, don’t be fooled. Our counselors can offer alternatives that will positively affect your financial future.