How Much Do You Know About Professional Debt Relief Options?

Correct Answer:(b) 2-5 years. The amount of time you are in the program is based on the amount of debt enrolled, the amount you have agreed to deposit into your dedicated account each month, and the consistency of those monthly payments. On average, however, it takes approximately 24-60 months to complete a debt settlement program.

Correct Answer:(d) Unsecured debts, except for bankruptcy, which may provide help with your essential secured assets. For the most part, debt relief options are designed to handle unsecured debts such as credit card debt, some types of unsecured personal loans, or medical bills.

Correct Answer:(a) Debt settlement. Compliant debt settlement companies do not charge upfront fees for their services. Fees are collected only when the debt settlement company successfully negotiates a settlement with your creditor on your behalf.

Correct Answer:(b) Credit counseling/debt management plans. The National Foundation for Credit Counseling (NFCC) reports that simply talking to a credit counselor will not impact your credit score at all. If you enroll in a debt management plan, your credit score will be impacted. The NFCC notes: “There may be a slight decline at first but then you can expect an increase early in the program.”

Correct Answer: (b) Credit counseling/debt management plans. Unlike some other debt relief options, credit counseling and debt management plans do not require that you meet a specific debt amount to qualify. Because each debt situation is different, a credit counselor evaluates your suitability for a debt management plan.

Correct Answer: (b) Debt settlement. Your debt settlement company negotiates with your creditors to accept less than you owe on your principal balance. Some debt settlement clients have been able to save as much as 50 percent on their balance, before fees.

Correct Answer: (c) Debt settlement. Balance transfer cards and debt consolidation loans may work best for those with a small amount of debt that they wish to pay down quickly. Credit counseling may work for those with a bit more debt who are still able to afford to pay the total balance they owe over time. Debt settlement, though, helps those who have a large amount of debt secure a certain amount of debt forgiveness and a way to pay off the remaining debt in a timely manner.

Correct answer: (c) Chapter 7 bankruptcy. According to Experian, a Chapter 7 bankruptcy will generally discharge your unsecured debts such as credit card debt, medical bills, and unsecured personal loans within four to six months after you start the process. It may also discharge certain types of secured debt, though your creditors may still have the right to repossess the property you used as collateral.

Correct answer: (d). Chapter 13 bankruptcy. According to USCourts.gov, in Chapter 13, "disposable income" is income (other than child support payments received by the debtor) less amounts reasonably necessary for the maintenance or support of the debtor or dependents and less charitable contributions up to 15% of the debtor's gross income.