Does Franklin Debt Relief offer debt
Yes, we offer a type of debt
consolidation program for consumers with credit card debt, medical bills, repossessions,
and accounts in collections.
Are credit card debt consolidation programs the
same as debt consolidation loans?
No, debt consolidation programs for credit
cards, notably debt settlement and credit counseling, do not
involve lending at all. Rather, it involves negotiating with credit
card companies to reduce interest, overall payments, and/or settle the
debts for less than you owe.
What are some common ways for consumers to
consolidate their unsecured debt?
Debt settlement / debt negotiation – This debt
reduction option involves negotiating the principal balance owed
by the consumer down so that it can be settled for less than the
actual debt. It is in some cases the fastest and most cost effective debt consolidation option.
This is the alternative offered by Franklin Debt Relief.
Credit counseling / debt management – This
option involves negotiating the interest rates charged on the credit cards.
Credit counseling plans typically last between 4 and 5 years.
Debt consolidation loans – This option involves
taking out a loan to pay off any outstanding credit card balances.
Normally it is secured by collateral like your home or vehicle.
Unsecured debt consolidation loans are offered by companies like
Citifinancial, Beneficial, and American General Finance.
Credit card balance transfers – This option
involves taking the balances of all your credit cards and putting
them on another credit card with a lower interest rate or minimum
Chapter 13 bankruptcy
– This option involves
paying back your creditors over 3 to 5 years through a
court-approved payment plan, which is based on your income and monthly
Is a debt consolidation loan a good option for
consumers seeking debt relief?
In many cases, yes. In other cases, however, a
consumer may be better off using debt settlement, credit counseling,
or bankruptcy for debt relief. In a lot of other cases, consumers who
need debt relief are not even eligible for a debt consolidation loan
because of bad credit, high debt balances, or any other factor which
may raise a red flag to a lender.
What determines whether a debt consolidation
loan is a good debt relief option?
Obviously the term, rate, and conditions of the
loan are critical. In order for a debt consolidation loan to make
sense, clearly the monthly payment, interest, and/or payback term must be
less than staying the current course. Assuming these factors are all
favorable to the consumer, the most important determinants of
the suitability of a debt consolidation loan for your situation is a) the
nature of the loan, b) the nature of your debt problem, c) your income
stability and the amount of “breathing room” you’ll have if an
unexpected expense arises, and d) how these all play into each
Why is the nature of the loan important?
The nature of the loan is important for a few
reasons. For one, a secured debt consolidation loan raises much
different issues for a debtor than an unsecured one. For example, if a
consumer takes out a second mortgage to consolidate their credit
card debt, they better have sufficient income and “breathing room”
because as little as one missed payment can result in the foreclosure of
their home. Secondly, the nature of a debt consolidation is important
because a high interest, low payment unsecured loan may
provide short-term relief, but in the long run, it may cause the consumer
to lose thousands of dollars in interest charges and fees.
Why is the nature of the debt problem
Some studies show that over 70% of consumers
who refinance their property or take out a second mortgage to pay
credit card debt
end up in the same financial position in as little
as 2 years. Given this fact, a debt consolidation loan rarely makes
sense if the borrower’s circumstances are the result of overspending or
poor budgeting. After all, a debt consolidation loan will only delay
the inevitable---coming to grips with a spending problem---while
removing equity from your largest investment---your home.
Why is my income stability or the amount of
“breathing room” important?
This is particularly important for consumers
choosing the secured debt consolidation route because as we mentioned
previously, their home can be foreclosed in the event that as little as
one payment is missed. Obviously consumers whose income fluctuates
dramatically each month or who are in an industry / company that is losing
jobs have more to consider before they ever take out a debt
consolidation loan. This issue is important for unsecured debt
consolidation loans as well because if the likelihood for successfully
satisfying the loan is low, the consumer would most likely be better off
tackling the debt through settlement or credit counseling. After all, why
waste time and money paying back interest charges that you cannot
afford? “Breathing room” is often a forgotten variable when a consumer
is considering his or her debt relief options, including with our
program – debt settlement. The main reason for this being so
important is that unexpected expenses are almost inevitable to arise
throughout the pay off term of the loan or the program.
Without sufficient savings or surplus income to compensate in the event this does
occur a consumer will be forced to miss payments, which means things
likely won’t work out for them.
Are bill consolidation loans tax-deductible?
The interest from debt consolidation loans that
are secured by a home is in fact tax deductible. This is one of the
What are some other advantages of using a
home-equity debt consolidation loan?
The other advantages are the interest and
monthly payment are typically much lower than what you are paying
on a credit card. This has to do with the fact that the debt is
secured (so the lender is taking on less risk) and the payment term is
somewhat long. Another advantage is that consolidating your debt into
one payment not only gives you more peace of mind, but it also means
you are far less likely to be late on a payment, which improves
What options do I have for consolidating
Consolidating hospital bills is best achieved
through settlement or negotiation, credit counseling, or by using a
home equity debt consolidation loan. The problem with medical
bill consolidation, however, is that sometimes the monthly payment
is higher than what you are currently paying. Unfortunately, all too
often consumers with medical debt are left with no other choice but
to file bankruptcy.
Read this article for more information about
help for hospital bills.