Credit Relief refers to the process of reducing or relieving credit problems of businesses and individuals. There are different methods of receiving credit relief. Some of the important methods include debt consolidation, credit counseling and debt settlement.
The credit relief organizations situated around the world provide a comprehensive range of products and services to people who are having problems with credit or debt. Why credit relief is required Various types of loans, for example, home loans, personal loans, and credit card debts lead to increasing burden of debt on the people. In order to reduce this burden, as well as averting insolvency or bankruptcy, credit relief companies offer a number of protective measures to the customers. In this process, the financial situation of a particular individual is assessed by them and the necessary steps are implemented.
They try to save the borrower from adverse financial conditions by negotiating with the creditors for lowering the interest of loans and amount of principal on behalf of the debtor. For this purpose, they employ a number of sophisticated methods. Most of the credit relief companies function as non-profit seeking entities. Methods of Credit Relief
Credit Counseling Credit counseling organizations help the borrower to minimize his debt burden by negotiation with the creditors and designing an alternative payment plan. In this way, an attempt is on to reduce the rate of interest.
Debt Consolidation In case of a debt consolidation, a number of loans are combined into a single loan with a lower interest rate, lower principal amount and reduced repayment term. In this way, the debt can be paid off early and bankruptcy can be averted.
Debt Settlement In case of a debt settlement, negotiations are carried out with the creditor regarding lower repayment programs.
Credit Card Balance Transfers This is one of the most suitable options for credit relief.
Besides these, there are other methods of credit relief and they include the following:
Utilization of a home equity loan for credit card debt relief
Liquidation of properties for repaying credit card debt
Taking a loan against a 401(k) plan as a method of credit card debt relief
Liquidation of Individual Retirement Account (IRA) for repaying credit card debt
Credit relief under Chapter 13 bankruptcy
Credit relief under Chapter 7 bankruptcy
Last Updated on : 9th July 2013