Does Franklin Debt Relief offer debt consolidation services?

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 payment.

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 expenses.

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 other.

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 important?

Some studies show that over 70% of consumers who refinance their property or take out a second mortgage to pay off 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 main advantages.

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 your credit.

What options do I have for consolidating medical debt?

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.