debt relief

Debt relief sounds great, but rarely is an option.

According to Investopedia, debt relief is “the reorganization of debt in any shape or form so as to provide the indebted party with a measure of respite, either fully or partially.” Debt relief can take a number of forms. For example, debt relief can be reducing the outstanding principal amount (again, either partially or fully). Or, it can be lowering the interest rate on loans due. And finally, it can be extending the term of the loan, among others.  To be effective though, these solutions require approval by the creditor.  Creditors may only be willing to consider debt-relief measures when the repercussions of debt default by the indebted party or parties are perceived as being so severe that debt mitigation is a better alternative. Debt relief may be extended to any highly indebted party, from individuals and small businesses.

The likelihood of a person struggling to get help from a creditor is unlikely.  Creditors are more flexible with large companies who are experiencing a temporary cash flow problem – like many businesses during COVID.  Creditors want to get paid and find it in their best interests to help large companies continue operations so that the creditor gets paid.  But with individuals struggling to pay their debts, creditors will offer forbearance for 30-90 days.  While that is a nice gesture, it’s usually not enough to resolve a debt problem.  And if the creditor does not agree, then what do are your other options.

Colorado Debt Help has Many Options

Colorado Debt Help looks at other solutions rather than hoping a creditor will help its clients.  Most of the time, bankruptcy is an effective solution to debt problems.  In bankruptcy, you can select your chapter and determine your outcome.  For example, if you need to repay taxes, you can do that in a chapter 13 without any penalties or interest.  If you have a bunch of credit card debt that you’ll never afford to repay, you can get rid of it in a chapter 7.  You can even file chapter 11 for more complex debt problems. The advantage of bankruptcy is that it’s federal law. You know what the outcome will be once you decide to file and creditors cannot stop you from getting that help.

To determine whether bankruptcy is an option for you, contact Colorado Debt Help.  We offer free consultations to see if bankruptcy is an option, and if so, which chapter is the best.