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This calculator will help you compare the three most popular options for debt relief to the minimum payments that you’re making now. Simply enter the total amount you owe and the average interest rate of your accounts. You’ll see an estimate of the monthly payments you can expect with a debt consolidation loan, a debt management program, and debt settlement. You can learn more about factors that may affect each solution below the calculator.
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Payments and interest charges aren’t the only factors that can affect your decision. You also need to take the following factors into account.
Do-it-yourself solutions like debt consolidation loans are contingent on whether you can get approved. If you have a low credit score or a high amount of debt relative to your income, then you may have trouble finding a lender that will approve you at the right interest rate.
While Debt.com can connect you with lenders who specialize in working with people who have bad credit, make sure to consider carefully how the loan will impact your monthly payments and total costs. If you have bad credit, you may be better off using another solution.
For debt management programs and debt settlement, there are no minimum credit score requirements to qualify.
If you’ve missed any payments by more than 30 days, it can have a significant negative impact on your credit. This may make it harder to qualify for do-it-yourself solutions like consolidation loans.
If your debts are past-due, a debt management program may be the solution that you need. Most creditors agree to bring balances current once you make three consecutive payments on the program. This can help you stop ongoing damage to your credit score faster.
If you have several debts that are behind or debts that have been charged off by the original creditor and sold to a collector, then debt settlement is often the best solution. These accounts are already damaging your credit, so it makes sense to settle for less than you owe so you can get out of debt quickly.
Another important factor that should play into your decision is whether you have a stable budget. You need to be able to maintain a budget that has built-in savings. This helps you build your emergency fund, so you can cover unexpected expenses and emergencies without making new charges on your credit cards.
If you can't maintain a balanced budget with savings, then you have a higher risk of generating new debt. If you consolidate with a loan, it will zero out your balances, meaning you can run up new balances in their place. If you're not careful, you can end up with more debt instead of getting out of debt.
If you’re in a stable financial position with ample free cash flow, then do-it-yourself solutions make sense. However, if you’re having trouble making ends meet or are living paycheck-to-paycheck, then you may be better off getting professional help.
If protecting your credit is a priority, then some solutions will be preferable to others. Debt consolidation and debt management programs do not create any negative notations in your credit report. When done correctly, they will have no negative impact on your credit report.
On the other hand, debt settlement and bankruptcy both result in negative notations in your credit report. Thus, you should be prepared for some damage to your credit score. However, if your score has already been affected by your debt, maintaining a high score may not be apriority. In this case, focus on the solutions that can get you out of debt faster and minimize your costs.
Another important decision that will affect your journey to get out of debt is finding the right term for repayment. “Term” is the length of time it takes to get out of debt.
For any debt solution that you choose to avoid bankruptcy, the term will affect your monthly payments. A longer-term will result in lower monthly payments, while a shorter-term will increase the monthly payments but allow you to get out of debt faster.
With the calculator above, the term is fixed on each solution. However, when you start working with the company that Debt.com connects you with, they will help you choose the best term to provide the payments that you need.
DISCLAIMER - Debt.com does not provide direct debt adjustment services, but, upon request, acts as a locator service for BBB registered companies. It is ultimately up to you to determine whether the companies that we may introduce you to are appropriate for your situation. For debt consolidation programs, where permissible by law, companies may charge a one-time enrollment fee typically from $25 up to $75 for account establishment and for debt relief proposals submitted on your behalf to each of your creditors. Monthly program administration fees will vary from $5 but no greater than $75 depending on your state of residence and/or the number of creditors who agree to accept proposals and become enrolled in the program. Fees subject to change if permissible by law. For debt settlement programs, by law, you may not be charged any fee until a debt settlement is arranged on your behalf, you approve the settlement, and at least one payment is made towards the settlement. Each program offered by independent financial service providers is unique so ask them for their complete details of the program and fees.
Not all consumers are able to complete debt relief programs for various reasons, including their ability to save sufficient funds. The use of debt resolution services could negatively impact your credit and may result in legal action on the part of creditors or collectors for unpaid balances. Consumers enrolled in debt consolidation programs who fail to adhere to the terms of their debt management plan (DMP) may forfeit the benefits of debt relief and revert to the terms of their original creditor agreements. Read and understand all program materials prior to enrollment. Please contact a debt relief specialist for complete program details.
Your debt relief analysis and savings estimate is free, will not affect your credit, and you are under no obligation to enroll in, or purchase, any product or service.