Will Debt Settlement or Debt Negotiation Help?
Many residents of New Mexico might be looking for an alternative debt relief option to bankruptcy, especially if they have high-balance, high interest credit cards. A debt settlement or debt negotiation program may help them avoid personal bankruptcy and settle debts for less than the full amount owed. The goal of a debt settlement plan is for consumers, through a debt negotiator, to convince creditors to agree to "settle" debts for much less than what is actually owed.
How Does Debt Settlement Work?
As part of the debt settlement process, consumers in distress are generally required to stop paying high interest credit card minimums and instead "set aside" and use those minimum payments to extend a settlement offer (or a lump sum amount) through a debt negotiator, to a credit card company. It makes sense that a credit card company, faced with the chance of possibly "selling off" bad debt for as little as 10 cents on the dollar might be willing to accept a negotiated settlement offer from a consumer truly experiencing a financial hardship. While it's true that debt settlement can save a considerable amount of money and it can be an alternative to bankruptcy, the drawbacks of such an ambitious or aggressive debt relief option should be made clear from the beginning.
For instance, debt settlement as a rule will have an unfavorable effect on personal credit, but the impact will be less harmful and shorter-lived than personal bankruptcy. Also, when consumers stop paying cards according to the terms of their agreements, creditors can threaten or take legal action. Lastly, any money that is saved by settling, which can be a generous amount, is subject to taxation.
If you are in need of debt relief assistance due to high interest, high balance credit cards cards and other unsecured debts, learn more about your debt relief options and get a free debt relief analysis and savings estimate - at no obligation.
Financial Assistance from the State
Like the federal government, the state of New Mexico does not offer specific credit card relief programs, grants, or consolidation loans to help consumers pay off their credit card debt obligations. The good news is, the state does offer several areas of support, helping residents get access to food, medical assistance, housing assistance or childcare. To learn more about these resources, go to the state's Human Services Department official page Looking for Assistance section.
Debt Consolidation Through Debt Management Plans
A debt management plan is another debt relief option worth exploring for consumers who want to combine or consolidate their high interest credit cards and other unsecured debts into one, more manageable monthly payment. A personalized debt consolidation or debt management program (DMP) coordinated by a credit counselor or debt counsel generally presents the following benefits to those who enroll, such as lower interest rates and the waiving of late fees and penalties, in order to help consumers save a significant amount of money every month while getting out of debt fairly quickly.
In New Mexico as in other states, a credit counselor or an accredited debt relief specialist will usually interview a consumer before customizing a DMP in order to make sure that the program will meet their debt relief needs. Then they will conduct a budget analysis to find out how much money can be realistically allocated each month to pay down those debts. Based on this information, they will come up with a game plan (a debt management plan or DMP) and send proposals to each of the consumer's creditors requesting the benefits of debt relief for the individual or family experiencing financial hardship. These benefits typically include a waiving of late fees, lower interest rates and penalties, and more favorable, more affordable repayment terms. Those creditors who agree to the proposals are then added to the debt management plan. Consumers must still pay the creditors who do not accept the proposals according to the terms of their original cardholder agreements.
For the most part, debt consolidation or debt management plans can be very effective and save quite a bit of money, but only if consumers stop compounding their credit card debt and begin the process of paying down the principal amount of debt on time, each month, at a lower interest rate. The concept is simple in theory: Stop using credit cards; start paying down existing principal debt on time, month after month, at a lower interest rate; fulfill the program as scheduled, and then celebrate your hard-earned, debt-free day!
Could a debt consolidation or debt management plan help you resolve debts faster, and how much could you save? Find out by requesting Your Free Debt Relief Evaluation and Savings Estimate.