Which Is Better? Debt Forgiveness Or Debt Relief?
If you tell yourself that achieving a debt-free lifestyle is a fantasy and simply unattainable, you could be correct. But maybe with some help, you can achieve that lifestyle. The first step towards debt free-living is to clean up any outstanding debt you may have. Sounds logical, right? The next question then is, how do you go about doing that? Do you go for a debt forgiveness or debt relief program? Which is the quickest way? Which program is the least stressful? Well, with any new project, your best bet is to always do a bit of homework upfront. You should start by understanding the differences between a forgiveness program and a relief program.
Debt Is Big Business
Unfortunately, debt collectors and creditors make lots of money on your debt. And a lot of times that’s because folks buried in debt feel discouraged and desperate to dig out so will believe anyone who will help them dig out.
Advertisers of credit card debt forgiveness and credit card debt relief programs will have you believe that you become instantly debt free by simply signing up for their programs. They’ll have you thinking that by making a few phone calls and signing a few forms, your credit and debt problems are behind you. Think again. If only it were that easy. Don’t be fooled, debt forgiveness and relief programs both have negative consequences that advertisers fail to mention. Before signing up for either program understand the good and bad of each program.
The Good & Bad of Debt Forgiveness
Even though it may sound like a sweet deal, when it comes to any type of debt cancellation, there are strings attached.
Debt forgiveness simply means that your creditor agrees to cancel some of your debt. But what’s wrong with that? On the surface, canceling out your debt sounds great, that is, if you don’t mind paying on the back-end. For you see, there are three big negative consequences to debt forgiveness.
- you will be charged with very high fees
- the debt that is forgiven becomes taxable income, which could throw you into a higher tax bracket
- your credit score is damaged
So, are the three big negatives worth it? That all depends upon your personal situation. Some people do not mind fees, or effects on their taxable income and credit scores. But if you are worried at all about those issues, stay clear of debt forgiveness and simply pay off your debt the old-fashioned way, a bit at a time.
The Good & Bad of Debt Relief
This just means finding a quicker way to pay off your current debt. You can accomplish this through debt consolidation loans, balance transfers, debt management plans or debt negotiation arrangements.
All of these debt relief programs help relieve your debt pains but be careful because if you choose the wrong one, it could make your financial problems worse. Debt relief programs do not come cheap. For example, banks could charge as much as 10% for debt consolidation loans, those interest charges can add up very quickly. And it may or may not affect your credit, depending upon which program you choose.
Which Is Better? Debt Forgiveness or Debt Relief?
If you are buried in debt, there is help, you just need to choose which program works best for you. Be careful though not to let your debt get to the point where you become discouraged because then you may become desperate and not make good decisions. Remember that it took a while to build up your debt, so it will take some time to whittle it down. Give yourself a break, take your time in making your decisions, do your homework and approach a debt forgiveness or debt relief program with caution.
