Debt Consolidation, Debt Relief Programs

Debt consolidation, credit counseling, and debt relief programs are options for Texans drowning in high-interest credit card debt. Inflation continues to take a toll not only on Texans but people across the country and internationally. While wages in Texas are not increasing to match the rising costs of goods and services, credit cards have become a common source to fill this gap. According to LendingTree, in October of 2022, the average interest rate on a new credit card offer was 22.21%. Combining high interest rates with high inflation is a perfect storm crushing the financial well-being of many hard-working families. If you are struggling with debt, it may only worsen as the Fed has announced more potential rate hikes, and inflation is likely to continue at levels not seen in decades. Below are some options to consider:

Balance Transfers:

Transferring your credit card debt to a new card with a zero or low introductory rate can help give you some temporary relief and allow you to pay down the principal without added interest. Reloading the debt on your existing cards is easy, so be careful of your spending habits, or you could wind up in a worse situation. This will not be a viable option if you do not have stellar credit scores and a low debt-to-income ratio.

Debt Consolidation Loans:

Like a balance transfer to a new credit card, this option will require a great credit score and a low debt-to-income ratio. However, the rate will be locked in the loan term, which will protect against future rate hikes. You can apply at your normal bank or credit union or use an online platform to shop multiple lenders with one application. The online platforms perform a soft inquiry that will not impact your credit score. If you decide to accept an offer, the lender will pull a hard inquiry and may verify additional information, such as your income.

Credit Counseling:

A credit counseling debt management program is an option to consolidate debt without needing a new loan. This works for most credit cards and some personal loans, but most high-interest predatory or payday type loans will not accept credit counseling programs. The credit counselor has agreements with most credit card companies to lower your interest rates to under 10% in many cases. You will provide one monthly payment to the credit counselor, who will then distribute the payment to your individual creditors until the debts are paid off. This hardship program may negatively impact your credit scores, depending on where your scores stand at enrollment. You will not be able to make further charges on your enrolled debts. However, your payment to the credit counselor could be lower than your combined minimum payments, so you can start saving money immediately. These programs typically last around five years.

Debt Relief:

Like debt consolidation, debt relief is a somewhat generic term that can refer to multiple options. Usually, it refers to a debt settlement or debt negotiation program; for many Texans, this can be a great alternative to bankruptcy. Credit counseling and settlement differ because your creditors are not paid monthly. Instead, you deposit money into a settlement savings account, and the creditors go unpaid until enough money accrues to make a settlement for less than you owe. This process repeats until all debts are settled. A debt relief program using this method may be able to resolve your debt in as little as 24 to 48 months and may provide a program payment that is often less than half compared to minimum payments. The primary downside is that your credit score will be impacted when you do not make monthly payments to your creditors. However, if you cannot afford to make your minimum payments, have fallen behind, or feel you may fall behind in the future, this might be the best non-bankruptcy option if you can afford to pay back some of your debt.

Bankruptcy:

A credit counseling or settlement program may fit your needs if your credit scores do not allow you to use a debt consolidation loan or balance transfer. Debt settlement can also save you much more money while avoiding bankruptcy. Bankruptcy is always an option, but it is important to speak to a Texas bankruptcy attorney if you are considering this. Not everyone can eliminate unsecured debt with chapter 7. If your income and/or assets do not qualify you for chapter 7, your attorney may advise that your only bankruptcy option is a chapter 13 repayment plan. Knowing your bankruptcy alternatives can be significant if your only bankruptcy option is chapter 13.

Rebuilding Credit:

There is some good news if you have poor credit or need to utilize a program that will negatively impact your credit. With the right steps, you can rebuild your credit profile relatively quickly once your debt is resolved. More importantly, by resolving the debt, you can use cash instead of credit for your purchases and start investing and saving money to earn interest instead of paying interest. Your debt-to-income ratio will also improve once you resolve your which may give you more purchasing power. Remember, you can always rebuild a good credit score, but you cannot get back the money lost to interest or the lost opportunity to invest it.

Debt Redemption Texas Debt Relief is a 100% veteran-owned company based in Texas, exclusively serving Texans experiencing overwhelming debt. The company offers an affiliate platform to shop debt consolidation loans and credit counseling resources through an affiliate non-profit. The highly rated company also offers its Texas Debt Relief program, where Texans can take advantage of up to 40% lower fees compared to out-of-state debt relief companies. In addition, the firm has an arrangement with a highly rated Texas bankruptcy law firm to make it convenient for Texans to compare bankruptcy to non-bankruptcy options. Speak to a Texas Debt Specialist at 800-971-4060 or visit debtredemption.com for a free and no-obligation phone or office consultation.