Debt Relief Programs | Find the Right Way to Get out of Debt

Bills.com Team
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Highlights


  • Use the new Debt Coach tool to see how different debt relief programs will affect you.
  • Review the pros and cons of various debt relief programs.
  • Don't choose one debt relief program, until you compare it to others.
4.0
/5.0
(6 Votes)

Find the Right Debt Relief Program for Your Specific Needs

When you are searching for debt relief, it can be hard to figure out which of the many debt relief programs is right for you. There is no one-sized-fits-most solution. Each of the various debt relief programs has pros and cons. Your job is to figure out which approach has pros that outweigh the cons for accomplishing your financial goals. For some people, the primary goal may be to get out of debt in the shortest amount of time at the lowest cost, no matter the credit impact. For others the primary goal may be affordability, to choose the debt relief program that has the lowest monthly cost. Still others may have a primary goal of finding a debt relief program that won't harm their credit. The bottom line is that your individual goals will determine which of the many debt relief programs is right for you.

Debt Coach

Bills.com has introduced a new, free tool, Debt Coach, to help you navigate the maze of debt relief programs. With Debt Coach, your individual debts and your priorities are used to come up with a customized solution to get you out of debt. Use the Debt Coach tool to help you achieve debt relief.

Here is a chart designed to help you weigh the pluses and minuses of the various debt relief programs. You will find the type of debt relief program with a list of its pros and cons.

Debt Relief Pros and Cons
Type of Program Pros Cons
Credit Counseling Lowers interest rates Payback is 100% of principal plus some interest
Can lower monthly payment Monthly payment may not drop enough to offer relief
Stops late fees Monthly fees
No collection calls High dropout rate
  Credit rating impact
Debt Settlement Significantly lowers monthly payment Credit rating impact
Lowest cost to get out debt, while avoiding bankruptcy Collection calls
Speeds up the time to debt freedom Creditors can pursue legal action
Bankruptcy Chapter 7 Wipes out debts Difficult to qualify for
Offers a fresh start Process is public, which may be embarrassing
Prevents levy or garnishment May require liquidation of assets
  Severe credit impact
  Have to answer 'yes' on any job or financial application that asks if you ever filed BK
Bankruptcy Chapter 13 Stops collections Doesn't erase your debts
Prevents levy or garnishment Severe credit impact
  Monthly payment can be high, offering no payment relief
  Public process
Debt Consolidation Loan
Unsecured
May lower interest rate Requires excellent credit and low DTI
Make only one monthly payment Very few lenders offering this product
May extend the loan term Doesn't make debt go away, just transfers it
May lower monthly payment  
Debt Consolidation Loan
Cash-out Refinance
Lower interest rate Doesn't solve the debt problem
Make only one payment Turns unsecured debt into secured debt
Can extend loan term Requires strong credit and low DTI
Can lower monthly payment You can be 'trapped' in your home, if the home value drops below the mortgage balance
Balance Transfer Lower interest rate Low rate expires after 'teaser' period
  Interest rate skyrockets, if a payment is missed or late
  Transfers debt, but does not pay it off
  Requires excellent credit
  Fees can be high
4.0
/5.0
(6 Votes)

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