Credit card companies, money lenders and financial institutions give loans to people. These loans are given in the form of secured and unsecured debts for various period of time also with different rate of interest. Once the loan has been sanctioned a debtor needs to pay off this loan in the form of monthly instalments. If the debtor is unable to make payments on his account for certain period of time the total outstanding amount increases due to the interest charges being added to it.
Under such circumstances many debtors have to take help of debt relief programs. Debt relief programs are a legal way of paying back reduced amount of debt to the creditors.
There are many debt relief programs which can help you with your loan problems. A debtor needs to analyse all the programs in detail to find which one would suit his financial condition the best.
Some of the commonly used debt relief methods are debt settlement and debt consolidation.
Debt Consolidation: In case you have a number of loans through credit cards then this method will be helpful. The interest rates of credit cards are much higher than the interest rates of unsecured loans given by banks. Debt consolidation is a way in which you can take one loan at a much lower rate of interest or even at a fixed rate of interest to pay off your other credit card debts. Sometimes debt consolidation companies even discount the total amount of the debt. The second loan can be a secured loan in case you have asset or you can opt for an unsecured loan.
Debt Settlement: This is applicable to those who have unsecured debt in the range of $ 10,000 and above. This method enables a person to reduce the total amount of debt in the range of 40 to 60% of the total outstanding amount.