Does debt relief erase all of your debt?
Summary
Debt relief can help reduce some types of debt, but it does not erase all debts. Different debt relief methods work in different ways, and some debts do not qualify for relief.Key Facts
- Debt relief includes several options like debt settlement, debt management, debt consolidation, and bankruptcy.
- Debt settlement means negotiating with creditors to pay less than the full amount owed, often between 30% and 50% less, but only for debts creditors agree to settle.
- To seek debt settlement, people usually pause payments and save money to pay a lump sum for settlements, which can cause late fees and harm credit scores.
- Debt management plans involve negotiating lower interest rates and combining payments but do not reduce the total debt amount.
- Debt consolidation replaces multiple debts with one loan, ideally with a lower interest rate, but does not erase debt.
- Bankruptcy can erase some debts but typically does not affect student loans, most tax debts, child support, or alimony, and it stays on credit reports for up to 10 years.
- Not all creditors agree to debt settlement, so some debts may remain unpaid or go to collections or legal action.
Read the Full Article
This is a fact-based summary from The Actual News. Click below to read the complete story directly from the original source.
