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What is debt relief?
Debt relief is partial or full forgiveness of debt owed.
How does a debt relief program work?
Debt relief programs allow the consumer to pay back a percentage of debt owed. Typically, a creditor would negotiation with a debt relief counselor to reach an agreement on the amount is to be owed. Why would a creditor agree on a deal? When creditors are unable to collect on debt owed, they write-off the loss as a charge off on there taxes. It is more advantageous for a creditor to recuperate some monies than none.
What types of debt qualifies under a debt relief program?
All debt which does not require collateral can be forgiven (i.e. Credit cards, personal loans, hospital bills, etc). Homes, vehicles, and properties can not be forgiven since they are secured.
Will debt relief affect my credit?
Debt relief is beneficial for individuals who are unable to pay back their debt. People in this category may already have adverse credit scores because of payment history. A debt relief program will help you get out of debt; however, in the short run, it will not help your credit.
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