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Debt Help: How to Deal with Debt

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Tips on How to Deal with Debt

Finding someone with debt or seriously struggling with debt is easy. At some point in time, almost every American family has direct experience working to overcome a debt problem. Finding a debt problem is easy, but getting clear and concise advice on how to solve debt problems is challenging. That's where Bills.com comes to the rescue. We've put together tips, advice, resources, calculators and solutions to help you solve your debt problems. Should you solve your debt problems on your own or should you seek help? If you need to use a debt relief firm, which approach best fits your needs -- is it credit counseling, debt settlement, bankruptcy, or a debt consolidation loan? Let Bills.com point you to the right answers to your debt questions. We're working hard to make your path to debt freedom clearer and easier.

Quick Overview on Your Debt Relief Options

There are a few main forms of debt relief. To help you out, Bills.com has created dedicated mini-portals on each of these debt solutions, including: Debt Consolidation, Debt Settlement, Credit Counseling, and Bankruptcy. We have also created an industry leading debt white-paper to bring transparency to an otherwise intimidating topic,in which we compare the actual cost, monthly payments, time to debt freedom, and success rates of the main debt relief options.

Fast Advice if You Want a Debt Option Now:

Our quick advice goes something like this - if you have a home with over 20% of the value in equity, you should refinance your mortgage and consolidate debts with a new mortgage. If you can't refinance, but can afford to pay more than 4% a month in monthly payments, then explore rolling up your debts by paying as much as possible to the account with the highest interest rate first and then snowball up your debts until they're paid off. If you can't afford your monthly payments, then explore debt settlement (where you resolve your debts less than you owe and get debt free in a short amount of time, but sacrifice your credit rating) or credit counseling (where you pay slightly lower interest rates and lower your monthly payments). Lastly, if you cannot afford to pay even 1.5% of your outstanding balance each month, then seek counsel from a bankruptcy attorney.

Use Bills.com resources to find a pre-screened provider and get a free debt relief savings quote. Browse through Bills.com debt articles, FAQs, calculators, and debt blog to get you up to speed on dealing with debt and to help with all of your debt relief solutions. If you're looking for a debt provider or looking to learn about debt relief options, Bills.com shines the light on your pathway to debt freedom.

  • How do I choose a debt consolidation service?

    First, make sure that a debt consolidation service is what you need. Do you own your home and have equity? If so, maybe a debt consolidation loan or refinance would be right for you. Evaluate your priorities: is a low monthly payment the most important factor? If so, debt settlement might be your best option. Afraid of collection calls or your credit score impact? In that situation, credit counseling could be your optimal debt consolidation service. And finally, you need to research the debt consolidation service at various consumer protection offices, including the Better Business Bureau (BBB). This will give you an idea how honest and reliable their services really are. Fortunately, Bills.com has evaluated many debt consolidation services providers and can match you with a pre-approved provider, if you apply though the savings center above.

  • How does debt consolidation work?

    Usually done in consultation with a counselor or loan officer, a consumer consolidates all of his or her debts into one loan or one repayment plan.  Now, varying benefits and features of different debt consolidation type programs exist, so understand how all debt consolidation programs work, including refinance loans, credit counseling, debt settlement and debt consolidation.

  • How will debt consolidation affect my credit?

    The quick answer is:  it depends!  Debt Settlement will hurt your credit score, since you are not making current payments on your debts.  Credit counseling does not impact your FICO score, but many lenders look at enrollment into a credit counseling sponsored debt management plan like enrollment into bankruptcy.  A debt consolidation loan generally has a minimal effect on your credit. In most cases, you apply for a home refinance or debt consolidation loan and use the proceeds to pay your other debts. Although you will now have a single larger debt on your credit report, several small debts will be eliminated if you get a debt consolidation loan.

  • How does debt consolidation help?

    Debt consolidation can help you consolidate credit cards into one new program with one payment, with a consolidation loan, or by using a consolidation service that acts as your representative with the creditors to pay off debt faster and for a lower cost.  The typical benefits of a debt consolidation program vary between these primary benefits:  i) lower monthly payment, ii) lower interest rate, iii) reduced debt, iv) shorter time to debt freedom, and v) convenience.  Each type of debt consolidation program varies and offers a sub-set of these benefits, so use Bills.com and do your homework!

  • If I consolidate my debt what will debt consolidation do to my credit?

    Debt consolidation loans typically have a minimal effect on your credit. In most cases, you apply for a home refinance or debt consolidation loan and use the proceeds to pay your other debts. Although you will now have a single larger debt on your credit report, several small debts will be eliminated, lowering the credit utilization of those accounts. Other forms of debt consolidation services, including debt settlement or credit counseling will hurt your credit rating for the life of the debt resolution program, and potentially even longer.

  • What are my debt relief options?

    The most common debt relief options are: debt consolidation, debt management, and debt settlement. You may also want to consider home refinance or a home equity loan.

  • When do I need credit or debt counseling?

    If you have fallen behind on your debts, avoid opening the mail, or are receiving collection calls, then you should consider credit counseling. You should also consider it if you have been turned down for a loan due to your credit score or debt load and if you are suffering from personal stress from your debts.

  • Bankruptcy

    A type of aggressive consumer debt resolution where you attempt to either liquidate your debts through a chapter 7 bankruptcy, or re-organize your debts into a payment plan through a chapter 13 bankruptcy.

  • Credit Counseling

    A third-party managed debt payoff strategy where your interest rates are lowered and your monthly payments decline. A credit counseling program typically takes around five years to get debt free. Each consumer's experience depends on his or her creditors.

  • Debt Consolidation

    Taking multiple debt or credit lines and consolidating them into one new payoff plan. Frequently, this is a consolidation loan, provided to consolidate debts into one loan with one payment, typically shifting credit card debts to secured debt by refinancing a mortgage. 'Debt consolidation' is sometimes used to refer to a credit counseling or debt settlement program.

  • Debt Management

    A service provided by an agency that provides debt help services, including credit counseling, debt settlement, and debt consolidation loans. Most people refer to a Debt Management Plan as a plan administered by a credit counseling firm.

  • Debt Relief

    Debt relief means seeking help and aid in resolving debts, including debt consolidation loans, credit counseling, loan modification, forebearance, debt settlement, or even bankruptcy.

  • Debt Settlement

    Debt settlement, also called debt negotiation, is a process by which creditors (the lenders) agree to forgive a part of a balance, saving the debtor (the borrower) up to 50%+ of what was owed. The debtor must pay the new agreed-upon sum only and no more. In some cases, the debtor may continue to make monthly payments until the newly agreed balance is paid. In others, the debtor must make a lump-sum payment. The forgiven balance MAY be considered taxable income by the IRS and MAY be noted on a form 1099-C. Check with a tax advisor. The settlement may also be noted on the debtor's credit report.

  • Debt-to-Income Ratio (DTI)

    DTI is a formula that compares certain debts you have to your gross income. DTI can be viewed as a 'front-end' or 'back-end' ratio. The front end ratio divides your gross income by the total of your mortgage payment, property taxes, and homeowner's insurance. The 'back-end' ratio additionally accounts for debts like car payments, credit card debts, and court-ordered child support or alimony obligations. DTI is expressed as a percentage, the percentage of your gross income that the debts utilize.

  • Revolving Debt

    Revolving debt is consumer debt that is owed on an account that can be used repeatedly and is repaid in part or in whole, without the need to reapply for credit.

Business Ratings and Reviews

Deciding on which company to go with to meet your financial needs? Get the inside scoop on a company and read unbiased consumer ratings and reviews from the Bills.com community. Find out how a company ranks in several customer satisfaction categories to help you find the right provider for your needs. Then help the community out by providing your own reviews.

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