Q&A Articles

Explore These Alternatives to Debt Settlement

Carrying credit card debt can leave you feeling like you don’t have many choices. But the fact is, you don’t have to be stuck making minimum payments on multiple cards. There are alternatives that can help consumers pay off credit card debt more quickly and avoid paying years of high interest charges.

One of those options is debt settlement. Most often offered by for-profit companies who negotiate with creditors on your behalf, debt settlement allows you pay off what is owed to creditors in one lump sum that is generally quite a bit less than the total amount owed. While that might sound like a great deal, there are downsides to consider. For example, most debt settlement companies encourage their clients not to continue making payments during the negotiation process. This can lead to stacking up late fees and negative entries on your credit report. And when all is said and done, there’s no guarantee that every creditor will agree to a settlement. That would leave you responsible for paying back your original debt, as well as whatever fees accrue along the way.

Fortunately, there are a number of alternatives to debt settlement. They include:

Negotiating with Creditors Yourself

You don’t need a debt settlement company to negotiate with creditors for you; any consumer can call creditors directly to discuss and hopefully lower interest rates. While it’s unlikely you’ll be able to negotiate a lump-sum settlement, achieving lower interest rates will help you pay off your credit card debt more quickly and make your monthly payments more manageable. Not sure how to start? Try these tips to negotiate with creditors successfully.    Woman on the phone negotiating with creditors as an alternative to debt settlement

Getting Credit Counseling to Plan a Budget

When facing mounting credit card debt, many consumers believe they’re not earning enough to cover making payments. But more often than not, they’re just not budgeting their money efficiently. Nonprofit credit counseling helps consumers gain an accurate assessment of their current financial situation and work out a budget that allows them to pay all their creditors. You can start a free online financial assessment right now.

Signing Up for a Debt Management Plan

During the credit counseling process, you may find you’re a good candidate for a debt management plan. These plans help you pay off credit card debt in five years or less by working with creditors to lower interest rates, allowing more of your payment to go toward paying down the principal. Plus, rather than making multiple payments every month, you’ll make just one payment to your credit counseling agency, who then pays creditors for you. No more worrying about missing payment dates or adding late charges. You’ll see your balances start shrinking dramatically in just a few months.

Now that you know there are alternatives to debt settlement, you can make a decision that’s right for your circumstances and start working toward getting out of debt.

Looking for alternatives to high credit interest rates?

We can help. Our online credit counseling will:

  • Provide a free financial assessment
  • Determine your income, expenses and total debt
  • Create a manageable budget
  • Suggest solutions to help you reach your financial goals, which may include a Debt Management Plan

Clients on a Debt Management Plan typically pay off credit card debt in 5 years or less. Sounds good, right?

Take Charge America - Rated 4.9 / 5 based on 676 reviews. | Review Us On Trustpilot.com