6 debt relief myths DEBUNKED! ❌

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Today we’re diving into a topic that you’ve probably heard a good deal of misinformation about: Debt relief.

Jump to the good stuff:
00:00 Intro
00:27 Myth #1: Debt will vanish from my credit report.
01:10 Myth #2: All debt relief companies are scams.
01:57 Myth #3: Debt relief programs will take forever.
02:28 Myth #4: Few people actually have their debts settled.
03:03 Myth #5: Debt relief companies can’t charge fees up front.
03:36 Myth #6: Debt relief will help my credit score.

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VIDEO TRANSCRIPT:

Myth #1: My debt will eventually drop off my credit report, so why should I pay it off?
FALSE
It’s true when you default on a credit card or loan, it only stays on your credit report for seven years. But that doesn’t mean the debt is forgiven after it disappears. Your credit score may recover, but creditors — or more likely, collections agencies — will still demand you pay off your account.
The longer you ignore debt, the more of a headache it can be. Creditors can and do sue delinquent borrowers — and often add attorney’s fees and court expenses to your bill. If the judge finds you at fault, or you ignore the lawsuit, they could file a default judgment against you. This allows them to garnish your wages or even freeze money in your bank accounts.

Myth #2: All debt relief companies are scams.
FALSE
Debt relief has received a bad rap after some companies collected fees for debt settlements and dropped off the face off the Earth. But the US government started a major crackdown in 2010 to root out the bad apples.
Legitimate companies like National Debt Relief can actually help you get out of debt — if it’s the right option for you. You can make sure you aren’t signing up for a scam by checking the Federal Trade Commission’s list of companies and people banned from debt relief. Also look for American Fair Credit Council (AFCC) or International Association of Professional Debt Arbitrators (IAPDA) accreditation.

Myth #3: Debt relief programs will take forever.
FALSE
Debt relief programs usually take between two and four years to complete. If you think it will take you less time to pay off your debts on your own, you might benefit from other options.
How long it takes depends on how quickly you can save up the funds to pay off your account — and how willing your creditors are to settle. If your creditors agree to a settlement right away and you have the money ready, you’ll finish your debt settlement program more quickly.

Myth #4: Few people actually have their debts settled.
FALSE
On average, 74% of people successfully settle at least one account through a debt settlement program.
This is according to a January 2021 report by the Harvard Kennedy School on financial outcomes for debt settlement programs between 2011 and 2020.
Here are a few other key finding from this report on the success rate of debt settlement after 36 months:

Average amount of unsecured debt owed: $28,000 across 6.93 accounts

Average debt settled: 55% of debt across 3.8 accounts

Average savings after fees: $5,400

Myth #5: Debt relief companies can’t charge fees up front.
TRUE
Before 2010 it was common practice for debt relief companies to collect fees when you enrolled. In fact, the GOA believes it to be one of the major reasons debt relief success rates were so low at the time.
But now it’s illegal for any debt settlement company to charge fees up front, thanks to a 2010 amendment to the Telemarketing Sales Rule. Companies can now only collect fees on accounts they’ve already negotiated down. They can also require you to start putting funds into an escrow account to cover the settlement and fees right away.

Myth #6: Debt relief will help my credit score.
IT DEPENDS
Debt settlement can improve your credit score — if you’re able to complete the program without defaulting on any of your accounts.
But if you’ve already defaulted, debt relief can speed up the process it takes to get your finances back on track. This can improve your credit in the long run, but it won’t erase those defaults from your credit report. In that case, you’ll have to wait seven years for the defaults to fall off your credit report.

Can Unsecured Debt Garnish Wages, 6 debt relief myths DEBUNKED! ❌.

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You will need several incomes and at least one of them needs to be recurring.
All financial institutions with unSecured Debt are having a hard time to find financial obligation relief.

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Totally Free Federal Government Grants – Best Solution To Pay Off Credit Card Debt

It can take 3 to 6 months before you have your spending plan down. The outright best thing you can do to handle your Revolving Debt is to cut all of your charge cards in half. We require not stress over this debt.

When growing up we never ever actually bother about finances. Monetary issues are the last thing that would be on our mind. We are basically financial obligation complimentary, undoubtedly due to the fact that our expenses are taken care of by household. Its only when we venture out, we get accustomed to many a things and get accountable. We are liable for our own expenses. Being novices chances are that majority stop working, just to long for the blissfulness of being debt complimentary me. , if you are at this spot here is what you must do..

So we understand that having unSecured Debt is not such a bad thing when compared to Secured Debt, but how do we tackle reducing removing it. Well, the single most reliable technique is through financial obligation settlement.

I understand you may be believing, “What does he imply by ‘good thing’, my debt is eliminating me”. Well the word good is most likely not the very best word however let me discuss. If all your financial obligation were protected (by collateral) your lenders could quickly recuperate the amounts owed by claiming these products of security.

The way this mode of insolvency works is relatively basic in design and idea. It can be thought about a type of liquidation insolvency. That implies that all possessions that are not exempt will be sold (liquidated) and all monies generated from the sale will then go to those debtors that are owed cash. Obviously, there is more to the process than this however that is the most simplified description of how it works. Then the individual that has actually submitted for bankruptcy defense will be Debt Free, if the liquidation leads to a complete benefit of all debts owed.

Devote an area of your budget for settling debts. All of your credit cards, auto loan, school loans, money you obtained from household and buddies, shop cards must enter into this area. Your home loan can be included here if you desire but I would suggest keeping the mortgage out of this section and just focus on the Revolving Debt that you can pay off in a couple of years.

You need to understand that there are specific qualifications that you require to comply with when searching for a debt relief choice. All of them are reliable but you require to certify for it financially to be able to take full advantage of the advantages of each.

You should make sure that you understand that the best escape of a life strained with financial obligation is to make sure that you do not load any brand-new financial obligation. Think we all know that part. Living within our means would be a good way to move towards a financial obligation free life in future. And one of the most crucial things to do in this direction would be to make sure that you constantly have at least three months of living expenses set aside as cost savings, work on that very first. Then begin chipping away or swinging the bat, whatever motto works, each swing or effort gets you better. Never ever offer up.

In reality, declaring assistance is quite typically the finest choice you can make. Investing just cash that you have and not using charge card and purchasing only products required not desired.

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