Find the Best Debt Consolidation in Colorado Springs, CO

The need for debt relief in Colorado Springs

Colorado Springs residents had an average of $6,000 in credit card debt as of 2016, which is in line with the national average. When you start looking at other forms of debt, the situation looks even more severe. Unfortunately, many people in El Paso County struggle to keep up with their payments:

• 31% of people have some debt in collections, with 18% of those cases over medical debts.
• 14% of people with student loan debt are in collections over their unpaid student loans.

If you’ve fallen behind on payments or spend your money every month barely paying off the interest on your debts, consider professional debt relief as a way to get your finances back under control. Read more to find and compare different debt relief options in Colorado Springs.

Debt consolidation in Colorado Springs

Debt consolidation in Colorado Springs lets you combine all of your debts into one manageable payment. You can do this with a 0% APR credit card, through an agency or with a debt consolidation loan. These personal or home equity loans usually have lower interest rates than credit cards and longer repayment terms. That means you can stretch your debt across more payments while possibly even saving money overall.

Debt consolidation loans help you manage unsecured debt, specifically credit card debt.

You should consider a debt consolidation loan in Colorado Springs if you have:

• A credit score of at least 580, preferably higher
• Proof of income
• Unsecured debt of at least $5,000

You need at least a fair credit score to make sure the APR on your debt consolidation loan is better than your current interest rate. Otherwise, your debt consolidation loan won’t save you much money.

Debt settlement in Colorado Springs

While debt consolidation loans restructure your debts, debt settlement in Colorado Springs can actually reduce the amount you owe. Debt settlement involves negotiating with your credit card company to cancel your debt for a lump-sum payment. Many people in Colorado Springs choose to hire a debt settlement company to handle these sometimes complex negotiations.

Similar to debt consolidation, debt settlement only works with unsecured debt, like credit cards. Secured debts usually can’t be negotiated because the lender will simply repossess the collateral. If your debt is unsecured, the lack of any guaranteed repayment gives the debt settlement company a bargaining chip.

To be a suitable candidate for debt settlement, you should:

• Already be behind on payments
• Have poor credit (below 580)
• Not be qualified for debt consolidation or credit counseling
• Have unsecured debt in excess of $10,000
• Be willing to take two to four years to resolve your debts

Know that debt settlement has a harsh impact on your credit score. This is because part of the negotiation process involves you not making any more payments to your credit card company (or other lender). Instead, you pay into a separate account that builds up and is eventually used as a partial payoff that erases your initial debt.

While the impact debt settlement has on your credit score is significant, it is not as large as a bankruptcy. Keep reading for a more in-depth comparison of bankruptcy and debt settlement.

Debt settlement companies often charge 15% to 25% of the amount settled. However, in most qualifying cases, debt settlement still results in a lower overall cost for you. When choosing a debt settlement company in Colorado Springs, make sure that you avoid common debt relief scams.

If you don’t have enough unsecured debt to qualify for debt settlement in Colorado Springs, consider other debt relief options such as personal loans, home equity loans, debt counseling or balance transfer to a 0% interest credit card.

Debt relief alternatives in Colorado Springs

There are several other forms of debt relief available to Colorado Springs residents. Credit counseling is a type of financial education where you can get advice from professionals on how best to handle issues such as debt and budgeting.

Credit counselors evaluate the financial information you provide and develop a plan of action for debt relief. Many debt relief companies offering credit counseling can also guide you through debt consolidation and negotiate with your credit card company as well.

Bankruptcy is usually a last resort for debt relief. Bankruptcy is a legal process that wipes out most of your debts to give you a fresh start. However, bankruptcy comes with penalties such as:

• A significant impact on your credit score that can last for up to 10 years
• Higher interest rates
• Difficulty getting loans
• Your filing as a matter of public record

For more information on debt relief alternatives, check with the Federal Trade Commission.