Just How Much Can You Save With Debt Elimination Programs
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But just how much can they save you and how fast will your debts be paid off?
Let's take a look at the different debt elimination programs available to you and how much time and money they can potentially save you.
Debt Elimination Programs
Debt Consolidation Programs:
Non-profit debt consolidation programs can save you a considerable amount of money by reducing drastically the amount of interest that you pay. Often times a good non profit debt consolidation company can negotiate a 50% reduction in the interest that you are paying (and sometimes they can negotiate a 100% reduction!)
Here's a quick example of what you could save:
Let's say that you are carrying balances of $4,000 on 4 separate credit cards (Citibank, MBNA, Chase and Amex for example). The combined balance would be $16,000 and the average interest rate on the cards would be around 21%.
Here is what you could possibly save through nonprofit debt consolidation:
Current Payment: $650
Current Interest Rate: 21%
New Debt Consolidation Payment: $375
New Interest Rate: 10.45% fixed rate (a savings of over 50% in interest)
Monthly Savings: $275 and 10.55% in interest charges.
This is a hypothetical example but you can see why non-profit debt consolidation is one of the most popular debt elimination programs around.
Debt Reduction/Negotiation Programs:
With these type of debt elimination programs you are not going to see a monthly savings, but rather, a one time large saving once you (or more likely a debt reduction professional) negotiates a settlement with your creditors.
Here is an example of how these type of debt elimination programs work:
Let's say that you have unsecured debts totaling $15,000. you are barely making the minimum payments each month and this is forcing you further and further into debt.
You decide to consult with a debt reduction specialist who agrees to help you.
(Aside: Some debt reduction companies require an up front payment for their services. However, there are some excellent services out there that will take on your case with no upfront payment or ongoing payments. You simply pay them a percentage of any debts that they reduce for you.)
Keep in mind that this is a very aggressive debt elimination program. Once you start this program you stop paying your creditors altogether while a settlement is negotiated. in the mean time you make deposits into a bank account that you control, thus building up money with which you can ultimately pay off your creditors.
Let's get back to our example.
Your debts are $15,000. The debt reduction company would negotiate with your creditors to have this amount reduced. The actually percentage will vary but a 50% reduction of your debts is not uncommon. If you were to receive such a reduction here is what you would save.
Original Debts: $15,000
Savings At A 50% Reduction Rate: $7,500
Amount You Must Pay Your Creditors: $7,500
Typical Fee Paid To Debt Reduction Company: $1,875
(These types of debt elimination programs will typically cost you around 25% of the amount that you save. The more money the debt reduction company saves you the more they make. That is only fair. Remember we only recommend dealing with debt reduction companies that do not charge up front fees or ongoing fees for their debt elimination programs.)
Overall Savings: $5,625 in principal and 100% of the interest charges
For a more detailed look at these types of debt elimination programs click here (100% debt elimination)
Consider
these debt elimination programs
carefully, and put one to work for you immediately.
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