Is it too late to apply for debt relief?

If you’ve been in debt for a long time, you may wonder if you qualify for debt relief. Debt relief can offer reduced debt payments, a more manageable payoff timeline and an end in sight to a long debt repayment journey.

Even if you’ve been paying off debt over several years or have debt in collections, it may not be too late for you to get your debt resolved with the help of a debt relief company. Here’s more information on debt relief and the qualifications needed to work with a debt relief company.

What is debt relief?

Debt relief offers a way to restructure and reduce your total debt amount, generally lowering or simplifying your payments on the new balance.

Debt relief is most common for unsecured debt, or debt that doesn’t have collateral (such as a house, a car or a boat) attached to it. This typically applies to credit card debt, some student debt, personal loans, medical debt and some utility bills.

Types of debt relief

People may refer to a few different things when they mention the words “debt relief.” Different types of debt relief have different qualifications and will impact your balance and how you pay it off.

One of the most common types of debt relief is debt settlement. With this type of debt relief, you or a third-party representative will negotiate with a creditor to reduce the balance of a debt.

This is typically done when the borrower experiences a hardship and cannot pay off the debt in full. In this situation, the creditor may be willing to forgive some of the balance to recoup part of the debt.

If you work with a debt relief company, they’ll do the heavy lifting of the negotiation process and possibly get you better results than if you were to try to negotiate yourself. You’ll typically be responsible for making the new payments directly into an account managed by the debt relief company. The account will be used to pay off the negotiated balance and the company’s fees. You’ll also likely see an impact on your credit score.

Debt forgiveness works a little differently. Debt forgiveness is when the lender/creditor directly forgives all or part of your debt if you meet certain criteria, without the need for settlement.

Federal student loan forgiveness programs, for example, offer whole or partial forgiveness of federal student loans for teachers, doctors, veterans, those working in the public sector and those with a certain income level.

Certain hospitals also offer financial assistance programs for medical debt. If you’re unable to make payments on your medical debt, you may qualify for medical debt forgiveness.

Debt forgiveness can greatly reduce or even eliminate your balance, and you can avoid the fees and the impact on your credit score that debt settlement can come with. However, forgiveness has different criteria than debt relief, making it an option for a limited number of people. It can also have certain tax implications, as forgiven debt can count as income.

Something important to note is that debt relief is not the same as bankruptcy. While debt is discharged in bankruptcy, your assets (such as your house and car) may be sold to recoup the balance or enter a repayment plan. How assets are handled depends on the kind of bankruptcy. Bankruptcy will also stay on your credit report for several years.

Debt relief is also not the same as consolidation or refinancing. Debt relief can help you reduce the balance of your debt and the payments you’re making. Consolidation bundles your loans into one payment, not necessarily impacting your total debt amount, and refinancing will generally change the interest rate and terms of your repayment only.

How do you qualify for debt relief?

Different types of debt relief will come with different criteria. There are a few factors that you should consider.

First, your debt generally needs to be unsecured, which means an asset can’t back your debt. Debt relief programs generally won’t qualify for secured debt like mortgages, auto loans, home equity loans, secured credit cards or loans with collateral. With secured debt, if you default, your lender will seize the assets that secure the loan and sell them to make their money back.

If you have debt beyond the minimum threshold and your income-to-debt ratio limits your ability to progress – for example, if your debt balance is over half of your yearly income – debt relief might be something to consider.

More specific criteria, such as the kind of debt, will depend on the individual organization. Research to find a reputable organization with a long-standing track record, like National Debt Relief. If you’re unsure whether you qualify for debt relief, give the company a call to discuss it. Some, like National Debt Relief, will offer free, zero-obligation consultations.

When should you apply for debt relief?

If you’re struggling to pay for a large amount of unsecured debt, it may be a good time to consider debt relief.

When applying for debt relief, the key criteria to consider is how your debt is impacting, and will impact, your future finances. Struggling to make one debt repayment because you made a large, one-time purchase for the month may not be a qualifying factor, especially if your income can support your debt payments otherwise.

However, if you’re consistently struggling to make your repayments month after month, even after you’ve cut back on expenses, it might be time to consider debt relief.

Another factor to consider is the age of the debt. Some debt relief companies may require that you hold your debt for a certain amount of time.

However, if you are truly struggling to make payments on new debt—for example, if you maxed out your credit card for the month and then lost your job—you may want to consider speaking to a debt relief company, like National Debt Relief.

Can you apply for debt relief if your debt is in collections?

If you haven’t paid your debt for a certain time, your debt may end up in collections.

When a debt goes to collections, a collection agency will attempt to collect the debt by contacting you. Collection agencies may access your bank information to see if you have enough money to pay the debt. If it is legal in your state, a collection agency might garnish your wages to pay the balance.

You can qualify for debt relief even if your debt is in collections. If the debt is unsecured, then your debt is more likely to go into collections since your lender has no collateral to seize once you stop making payments.

If you decide to go forward with debt relief when your debt is in collections, the debt relief company you’re working with will take over communications on your behalf.

One of the advantages of working with a debt relief company is that the relief company will help you manage communications with the collections agency and offer help and tips in handling the phone calls and letters you’re receiving.

Is it ever too late to apply for debt relief?

Debt relief can help you with debt at any point as long as you meet the qualifications set by the debt relief company. Even if you’ve been paying off your debt for decades, you can still get your debt relieved and pay off your balance once and for all.

One important thing to consider is your state’s statute of limitations on debt. If your debt is a certain number of years old and of a certain type, debt collectors can’t garnish your wages or put a lien on your house. Collectors, however, can still contact you and attempt to collect the debt.

Even if your debt has passed the statute of limitations, debt relief is still worth considering. Paying off your debt can help improve your credit score, allow you to qualify for other loans and end communications from debt collectors.

Learn if you qualify with National Debt Relief

Whether your debt is one year old or 40 years old, if you have an unsecured balance and you’re struggling to make payments on it, National Debt Relief may be able to help you.

National Debt Relief is a debt settlement company that negotiates with lenders and debt holders to reduce its clients’ balances, allowing borrowers to pay off their debt when they otherwise can’t.

Those in a debt relief program can realize multiple benefits. Clients make monthly payments based on their income and ability to pay, and they can get a repayment plan that offers a payoff timeline in months—not decades. Their overall balance is also reduced, so they save money on interest and debt with every monthly payment, the overall cost of the debt and potential fees for missed or late payments.

If you want to know if you qualify, learn more on the National Debt Relief website – no matter how long you’ve been in debt.

What next?

If you have debt that is several years old or currently in collections, it’s still possible to qualify for debt relief. Different types of debt relief will come with different criteria to qualify. However, if you’re struggling to pay your unsecured debt, you may want to consider learning more about debt relief – no matter how old your balance is.

If you want to learn more about managing your finances, mental health and debt repayment plan, check out Bankrate and National Debt Relief’s ongoing article series about all things debt. Watch this space for tips, tricks and exclusive stories from readers like you and their debt repayment journeys.