National Debt Relief
National Debt Relief Review: Does Debt Settlement Work?
National Debt Relief is a company for debt settlement that negotiates on behalf of consumers to reduce their debts with creditors.
According to the firm, customers who participate in its debt settlement program will reduce the amount of credit card debt by about 30% after paying the costs.
However, ConsolidationNow warns that the process of settling debt, regardless of whether it is through National Debt Relief or any of its competitors, is a risk:
-Settlement of debts can be expensive.
-It can ruin your credit.
-It can take a long time. To reap any net benefit, you must adhere to a plan long enough to pay off all of your debts, which is usually up to four years.
ConsolidationNow suggests that debt settlement is only used in the last instance option for people in delinquency or struggling to pay the minimum payment on debts that are not unsecured after exhausting all alternatives. For many, bankruptcy is a more viable alternative because it provides an easier way to settle the debt. In addition, bankruptcy can protect consumers from being accused of a legal danger when participating in a debt settlement plan.
In collaboration on National Debt Relief
How do I qualify?
National Debt Relief works with those who have at minimum $7,500 or up to $100,000 of unsecured debts from credit cards and personal loans, lines of credit business and medical debts, and personal student loans.
National cannot settle claims due to IRS loans and tax bills, utility bills, or Federal student loans. It can’t pay home or auto loans or any other secured type (debts secured by collateral).
The average customer owes more than $20,000 of total debt, as per Grant Eckert, chief marketing officer of National Debt Relief. National conducts an informal credit pull as part of the application process to confirm your credit score and the outstanding amounts owed on each debt as per Eckert. This credit pull is a soft credit pull, will not impact any changes to your credit score.
Due to state-specific regulations that vary, National is not a deal in the following states: Connecticut, Georgia, Kansas, Maine, New Hampshire, Oregon, South Carolina, Vermont, and West Virginia.
The process of settling debts:
Once you hire National Debt Relief, you set up a separate savings account with your name on it. Instead of paying your creditors, they deposit a payment each month into the account. National decides the monthly payment amount, typically less than the monthly payments for customers’ unsecured debts.
If you stop paying your creditors, it will result in you becoming late on your accounts, and you will be charged penalties for late payment and interest, and the credit score will plummet.
Then, it negotiates with creditors on your behalf to negotiate with them for less than what you are owed because your deal is not obligated to pay the debt. Think of a lower amount as preferable to risk not making any payment even.
If they agree, you will pay the lender from your savings account, either a lump sum or installment payments. The first settlement is typically within three to six months, as per Eckert.
The company collects an amount when a debt is paid off. In 2010 the Federal Trade Commission banned companies that deal with the obligation to charge upfront costs.
National’s fees range from 15% and 25 percent of your total debt, based on the amount you have to pay and the state you reside in.
The programs for debt settlement generally require monthly and setup fees to keep your savings accounts. National did not specify if its programs need this fee.
National Debt Relief promises its clients an approximate saving of 30% when they include the fees. The savings are only available to those who remain with the program until the totality of their debts is most paid off. Although National claims that most of those who join the program stay with it, some people opt out due to various reasons, like an inability to make enough funds to pay the debts.
On average, National says that those who have completed their debt settlement program through National complete it in between two and four years.
National Debt Relief vs. Freedom Debt Relief
National Debt Relief claims that its clients can enjoy savings of around 30 percent. The rival Freedom Debt Relief states that its clients want 15 to 35% savings after fees are included.
The minimum amount of debt required:
National Debt Relief must have a minimum of $7500 in non-secured debt to qualify for the program, the same as Freedom.
The Better Business Bureau recognizes the Customer Experience
With an A+ rating and more than 80 complaints from customers in the last three years. The complaints were centered around issues with the service or product or billing issues, collection and billing issues, and sales and marketing issues.
Freedom Debt Relief has more than 350 complaints from customers with the Better Business Bureau in the same timeframe.
The risks of the process of debt settlement
Debt settlement is a risky process that comes with severe expenses and risks, such as:
This will mean that your credit score will fall:
Because debt settlement demands that you stop paying your outstanding debts. Late payments will be reported in your credit reports as well. Your credit scores will fall.
Additionally, every settled account will be reported as a credit item on credit accounts for seven years, starting from when the account was the first delinquent. This can harm your credit scores.
There is a chance that you will hear from debt collectors or creditors:
There’s no guarantee that your creditors will collaborate with National Debt Relief, and you might be approached by debt collectors or sued by creditors in the course of.
The fees and interest will continue accruing:
When you sign up for an agreement to settle your debts, and your account is deemed to be or remain in delinquency, that will lead to more interest and late fees. If you don’t adhere to the program until it is completed or if National cannot settle, you could end up with a more significant amount.
Forgiven debt can be considered taxable income
Debts forgiven over $600 can be viewed as income for tax purposes. Creditors can send a 1099-C tax form to you by mail or for the IRS. An exception is if you are declared insolvent (your obligations exceed your total assets) when the company settles your debts with creditors.
National Debt Relief vs. other options
The majority of customers who join National Debt Relief are not in debt, as stated by Eckert. Instead, they’ve been paying timely payments but have only made minimum payments or are at risk of falling behind.
For many people in this circumstance, there are alternatives to options for debt repayment and debt relief solutions.
Debt management plan
You’ll pay a non-profit credit counseling company to reduce your debts to one monthly installment and reduce the interest rate so that you can get rid of your debt quicker.
This is an excellent option for people with credit card debt who earn a steady enough income to pay the debt in the three-five years. Contrary to the debt settlement process and debt management, a debt management strategy will help to increase credit scores.
Consolidation of debt
Through debt consolidation means that you consolidate multiple debts into one credit card through the balance transfer credit card credit card for debt consolidation or line of credit as well as a 401(k) loan.
The new loan should have a lower rate of interest which will make your repayments more manageable and aid you to pay off the debt quicker while also avoiding ruining your credit.
Bankruptcy permits you to resolve your debt with protection from the federal court. Chapter 7 bankruptcy will erase most debts in 3 to 6 months. It clears the slate, and you could even be able to keep some assets.
The bankruptcy will stop collector calls and prevent legal action against you. Similar to the debt settlement process, your credit will be affected by how you settle your debt. However, research has shown that credit scores recover quickly.
Do-it-yourself debt negotiation
You can pick up the telephone and call your creditors to bargain with them. Like using a debt settlement firm, it’s not guaranteed to succeed. However, especially when you only owe some creditors, it can help you save time and money.
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