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Earn a high-yield savings rate with JG Wentworth Debt Relief
Being overwhelmed by unpaid bills, harassing debt collector calls, and ballooning interest charges is a heavy burden. The stress of feeling like you’re drowning in debt with no lifeline in sight can take a mental and emotional toll that affects all aspects of your life.
If you’ve found yourself sinking deeper into that inescapable debt cycle, unable to even tread water with minimum payments anymore, it may be time to explore your debt relief options. But what does debt relief actually entail for the average person? And what are the potential pitfalls to watch for with various methods?
The good news is that regardless of your specific situation, you likely have multiple paths to get that debt monkey off your back through relief programs and strategies. The bad news is that none of them are necessarily quick, easy, or come without some financial consequences attached.
Here’s a rundown of the most common ways consumers can pursue debt relief when they’ve maxed out on their own, along with some red flags to watch out for.
This information is provided for educational and informational purposes only. Such information or materials do not constitute and are not intended to provide legal, accounting, or tax advice and should not be relied on in that respect. We suggest that You consult an attorney, accountant, and/or financial advisor to answer any financial or legal questions.
Debt settlement
- How it works: You hire a debt settlement firm to negotiate lump sum payoffs with creditors for less than your full outstanding balance, allowing you to settle debts for a lower amount if paid by the agreed date.
- Typical timeline: Plan for an average of 48-60 months to complete negotiating settlements with all creditors and cumulatively save the lump sum amounts.
- Disadvantages: Incredibly damaging to credit in the short term since you’ll default by not paying debts in full. Debt is also considered taxable income. Results vary greatly.
Credit counseling
- How it works: You enroll in a debt management plan (DMP) through a non-profit credit counseling agency who negotiates reduced interest rates and consolidated monthly payment on your behalf.
- Typical timeline: DMPs typically run 3-5 years until all enrolled debts are paid off with counseling assistance.
- Disadvantages: You face upfront enrollment fees and commitment to avoid new credit use. May re-age/reset credit report delinquencies if accounts were already behind.
Debt consolidation
- How it works: You consolidate multiple high-interest balances into one new loan or credit card with an ideally lower payment and interest rate.
- Typical timeline: No set timeframe; your payoff timeline depends on the new loan/card’s balance and interest rate.
- Disadvantages: Hard for those with poor credit to qualify for lower rates that make consolidation worthwhile. You’ll still owe full balances just with shifted payment structure.
Bankruptcy
- How it works: Filing Chapter 7 or Chapter 13 bankruptcy allows you to legally discharge debts you can’t reasonably repay or restructure payment terms.
- Typical timeline: Chapter 7 liquidation filers can typically discharge debts within 4-6 months. Chapter 13 repayment plans last 3-5 years.
- Disadvantages: Bankruptcy tanks credit scores for years and still may require partial debt repayment. Future credit access is extremely limited in the short term.
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Keep in mind
While the methods may vary, all legitimate debt relief options have a few key disclaimers to be mindful of:
- Impact on credit: Beyond bankruptcy which decimates scores, most programs involve purposefully defaulting on debts at some stage which hurts credit ratings in the short-term.
- Potential tax liabilities: Certain forms of debt that get settled or discharged may get treated as taxable “income” based on IRS regulations around forgiven debt.
- Fees and costs: Even if they are nonprofit, credit counseling and debt relief firms still charge setup and recurring fees for their services that cut into your savings.
Have questions?
Give JG Wentworth a call to speak with one of our dedicated debt relief specialists. If you have $10,000 or more in unsecured debt, you may be eligible for our Debt Relief Program.* We’ve helped countless individuals who felt like they didn’t have a path forward reclaim their financial freedom. Some basic perks to consider:
- One monthly payment
- We negotiate on your behalf
- Average debt resolution in as little as 48-60 months
- 24/7 support
- We only get paid if we settle your debt
If you think you qualify for our program, give us a call today so we can go over the best options for your specific financial needs.
In conclusion
Regardless of which path you choose, understand that climbing out of excessive debt is a long-term process with no magic “quick fix” solutions. The road to debt freedom requires diligence, sacrifice, and living with some the short-term consequences.
But provided you commit and manage your finances properly, debt relief is absolutely achievable and worth regaining your financial and mental freedom.
About the author
*Program length varies depending on individual situation. Programs are between 24 and 60 months in length. Clients who are able to stay with the program and get all their debt settled realize approximate savings of 43% before our 25% program fee. This is a Debt resolution program provided by JGW Debt Settlement, LLC (“JGW” of “Us”)). JGW offers this program in the following states: AL, AK, AZ, AR, CA, CO, FL, ID, IN, IA, KY, LA, MD, MA, MI, MS, MO, MT, NE, NM, NV, NY, NC, OK, PA, SD, TN, TX, UT, VA, DC, and WI. If a consumer residing in CT, GA, HI, IL, KS, ME, NH, NJ, OH, RI, SC and VT contacts Us we may connect them with a law firm that provides debt resolution services in their state. JGW is licensed/registered to provide debt resolution services in states where licensing/registration is required.
Debt resolution program results will vary by individual situation. As such, debt resolution services are not appropriate for everyone. Not all debts are eligible for enrollment. Not all individuals who enroll complete our program for various reasons, including their ability to save sufficient funds. Savings resulting from successful negotiations may result in tax consequences, please consult with a tax professional regarding these consequences. The use of the debt settlement services and the failure to make payments to creditors: (1) Will likely adversely affect your creditworthiness (credit rating/credit score) and make it harder to obtain credit; (2) May result in your being subject to collections or being sued by creditors or debt collectors; and (3) May increase the amount of money you owe due to the accrual of fees and interest by creditors or debt collectors. Failure to pay your monthly bills in a timely manner will result in increased balances and will harm your credit rating. Not all creditors will agree to reduce principal balance, and they may pursue collection, including
