3 Debt Solutions You Need to Try in 2023
10 MIN READ
Published April 06, 2023 | Updated October 12, 2023
Are you financially overwhelmed because of unmanageable debt? It may be time to look into debt solutions in 2023 to help you regain control of your finances and live a debt-free life.
Unresolved debt can negatively impact your well-being and add stress to your life.
Several types of debt solutions are available for those with unmanageable debt.
The inflation rate in the U.S. was 6.04% in February 2023, compared to the long-term average of 3.28%.
While inflation is rising at a staggering rate, the unemployment rate in the country is 3.6%. In February 2023, there were 5.9 million unemployed people in the U.S.
If you are facing financial hardship and have been resorting to credit cards and personal loans to keep up with your expenses, it may be time to look into available debt solutions to provide you relief.
How Debt Solutions Can Help You
Debt solutions can provide you a path towards a debt-free life when you are struggling with making the minimum payments and are overwhelmed or feeling stuck.
An experienced debt relief company can negotiate on your behalf to reduce interest rates, reduce the amount you owe, change the repayment terms, and waive late fees and penalties.
If you are facing a difficult financial situation, debt solutions can be the first step towards regaining control of your finances.
When to Look For Debt Solutions
As a borrower, there are many debt relief programs available to you. Take a closer look at your finances to find a solution that is the most suitable for you.
Here are a few signs that you may want to look for debt relief solutions:
- You can’t manage your credit card debt.
- You are struggling to pay bills.
- You are unable to make more than the minimum monthly payments.
- You have maxed out credit cards.
- Your debt is in collections.
If you are committed, debt solutions can help you find a way out of your difficult situation.
It is also important that you have to work to fix the habits that keep you in debt. Avoid getting into any new debt while you pay off your current debts.
Doing-it-Yourself Debt Solutions
Many borrowers opt for DIY debt relief. If you prefer to go this route, a good way to start would be by contacting your lenders and explaining your circumstances.
Many financial institutions have temporary hardship programs through which they can lower your interest rates, offer new repayment terms, and waive fees.
You can also apply for a debt consolidation loan or a 0% balance transfer credit card if your credit scores are good.
DIY debt solutions require a lot of discipline and strong planning skills.
You will also need good negotiation skills to convince your lenders to agree to your proposed settlement terms. For example, you must be very familiar with the proper settlement requirements, and understand when your lender or bank will be able to negotiate on your debt.
While it is possible, DIY solutions can be stressful. Working with a debt relief company like TurboDebt is an easy, hassle-free option.
How Your Credit Score is Affected by Debt Solutions
Debt solutions may impact your credit score, but it largely depends on what kind of program you opt for. Every debt relief program is different.
Debt consolidation, for example, will not have much impact on your credit report. Credit counseling and debt management will also typically have minimal impact.
If you have already missed payments, incurred late payment penalties, have maxed out your credit cards, and have no means of paying off your entire debt, debt settlement is a good solution.
Although debt settlement can have a negative impact on your credit, it helps you avoid bankruptcy and other dire financial outcomes.
How Much Do Debt Solutions Cost?
Debt management costs will vary depending on the program you choose.
Monthly monitoring services offered by credit counseling companies can range from $25-$50 per month. An hourly session with a credit counselor for a detailed overview of your budget typically costs $75+/hour.
Debt settlement programs generally cost 15%-25% in fees. The fees are calculated on your enrolled debt and will either be charged after the client's first payment, or upon their completion of the settlement.
According to the American Fair Credit Council, debt settlement can help you save $2.64 for every $1 in fees.
Upon successful completion of the program, you may be able to save up to 50% on your debt before fees.
Work With the Best Debt Relief Companies
Before you work with any debt relief company, it is important to check the reviews and reputation of the company at the Better Business Bureau and at the Consumer Financial Protection Bureau.
There are many companies in the industry that it can be hard to choose sometimes, so it’s important to focus on ones that are well rated and deliver on their claims.
Here are a few red flags that you should look out for:
- Claiming that they can eliminate your debts.
- Offering guarantees to stop collection calls and lawsuits.
- Advertising new government programs to erase debts.
- Charging upfront fees.
- Asking for your personal or financial information.
Best Solutions to Get Out of Debt
The right solution depends on what type of debt you currently owe, how much you owe, interest rates, and what you are comfortable with.
Let’s take a closer look at some of the best debt relief programs currently available.
Many accredited debt counseling organizations offer debt management programs. You can enroll your debt into a debt management plan.
The agencies can then negotiate with lenders to waive penalties and fees or lower interest rates.
If you have multiple personal loans, credit cards, or other types of unsecured debts, debt management can provide you with an easier repayment plan.
In most cases, you will have to close a few lines of credit and credit cards when you enroll in the program.
The American Consumer Credit Counseling is a good resource for finding reputed and trustworthy credit counseling companies.
Debt consolidation is recommended when you have multiple debts. With this type of program, you can consolidate all your debts into a single monthly payment.
Debt consolidation involves applying for a 0% balance transfer credit card or a debt consolidation loan at a lower interest rate.
Once you are approved, you can use those funds to pay off your high-interest debts.
You will only be making a single payment each month. Debt consolidation allows you to save a considerable amount of money each month on interest.
If your debt is overwhelming and you do not see a way out of debt, it may be time to consider debt settlement.
Like with debt mediation, many debt settlement companies offer services where you can settle your debts for a lump sum lower than what you owe.
An experienced professional can skillfully negotiate with your lenders to reach a settlement that is agreeable to both parties.
This can result in savings of up to 50% on your total debt before fees.
Debt settlement is a good option for those who have missed payments, maxed out on credit cards, have accounts in debt collection, and do not have the means to pay off the entire debt amount.
Alternative Debt Solutions
Other than the debt solution services listed above, there are many other alternatives available to help you alleviate your debt burden.
Many nonprofit and for-profit companies offer credit counseling services.
Experienced counselors can take a deeper look at your finances, budget, and debt to help you come up with a suitable debt repayment plan.
If you have some debt and just need professional guidance on the best way to pay it off, a credit counseling agency can help.
Your counselor can offer you personalized advice on how to get out of debt and stay out of it.
In some situations, there may be no other recourse available other than filing for bankruptcy.
Although bankruptcy is a drastic step, it may be your only option if your debts are more than your assets.
Depending on your personal circumstances, you may be able to file for Chapter 7 or Chapter 13 bankruptcy.
This involves a lengthy process and will require you to hire an attorney. You may be able to relieve most of your debt, such as credit cards, medical bills, and personal loans.
Bankruptcy does not relieve all types of debt, and you may still be liable for back taxes, child support, and student loans.
Debt forgiveness is when your lender agrees to erase all or some of your debt.
Complete debt forgiveness is not easy to come by. You can qualify for partial debt forgiveness in some cases.
Many financial institutions have sponsored assistance programs and hardship programs if you are facing financial difficulties.
Some mortgage lenders may also offer mortgage relief programs. Check with your lender to see if they offer any debt forgiveness programs.
Debt Relief Companies to Consider
A debt relief company can offer you a number of solutions and options to pay off your debt and avoid bankruptcy.
These companies use various strategies to lower your interest rates, waive fees and penalties, and settle your account.
If you have considerable debt, it may not be possible to pay it off on your own.
A debt relief company can suggest the right program based on your circumstances so you can get your credit back on track.
One of the benefits of working with an experienced company is that they can help you pay less overall and resolve your debt faster through strategies like debt settlement.
Picking the right company to work with is not easy. Look for a company that has good reviews and a proven track record of successfully helping borrowers pay off their debt.
Ensure that the company is transparent about its programs and fees and take advantage of the free consultation service if offered.
2023 can be the year you finally take the first step toward a debt-free life.
Debt relief programs can provide you with a much-needed reprieve from your stressful financial situation.
TurboDebt has a track record of helping thousands of clients ease their financial burden and reduce their overall debt.
Our knowledgeable debt relief professionals will provide consultations, strategic planning, and counseling services to help you find the right debt solution.