Illinois is home to just under 13 million citizens. According to the 2015 census records, 14.3% of all those individuals over the age of 16 are earning below the poverty level income, with 10.5% of those being family homes. This has resulted in a large gap between monthly income and expenses, leaving many citizens in debt way over their heads.
Many other residents find themselves struggling with immense debt for multiple reasons. Some examples of these include a loss of their job, death of a spouse, medical expenses, divorces, underemployment, and poor money management skills. Having the constant struggle of repaying massive amounts of debt can have a seriously negative effect on both individuals and families alike.
If you live in Illinois and have more debt than you can handle, it may be time to seek debt relief.
What Is Debt Relief?
Debit Relief, also called debt settlement or debt negotiation, is a possible solution to help you get out of debt and ultimately achieve financial freedom. By explaining your financial hardship to creditors your debt relief agency can help to negotiate better interest rates, settle your debts for less than your full balance, and help you get your money management issues resolved.
What Is The Difference Between Debt Relief and Debt Consolidation?
Debt relief, as discussed above, is where a debt negotiation company deals with talking to your creditors about decreasing the amount you owe. Many of these companies will cut down on the confusion by allowing you to write them one check each month, and they in turn disperse that money to all the creditors that are owed. It’s important to note, this type of payment plan requires your debt accounts to stay open. This means that you still have access to using credit cards that you’re currently paying off.
Debt consolidation is where you take out a sizable loan that covers the entire cost of your debt. The money given to you from this loan goes directly to paying off all your debts in a lump sum. This allows for one monthly payment to the debt consolidation lender at a specific interest rate. With this type of debt relief all your current credit accounts will be closed, meaning you will no longer be able to charge money to credit cards and other accounts.
Who Qualifies For Debt Relief?
Debt relief is available for all individuals who are capable of making a monthly debt settlement payment. If you are unable to make any payment it’s likely you will need to file for bankruptcy. Remember that both debt negotiation and debt consolidation require you to pay a certain amount each month towards your existing debt.
The type of debt you currently have is another factor taken into consideration when it comes to qualifying for a debt relief program. There are specific loans which debt relief companies can help you with and specific ones they cannot.
- Bank Loans
- Installment Loans
- Credit Cards
- Unsecured Personal Loans
- Student Loans
- Business Debts
- Mortgage Loans
- Auto Loans
- Back Taxes
- Bail Bonds
- Litigation Accounts
These are just a few examples of the types of loans which do and don’t qualify for debt relief. Speaking to a debt relief agency about your specific debts will help you better understand what qualifies for their programs.
Laws and Regulations Protecting Illinois Customers
Illinois has passed two different acts that are enforced to ensure debt relief companies, who are hired to manage, consolidate, and settle consumers’ debts, follow certain standards.
Debt Management Service Act
This act sets a cap on the fees that are allowed to be charged by any debt management company. It’s very common for these companies to charge a monthly fee for planning and distributing your money to the creditors. The initial fee and monthly fees are capped at $50 each. This act also requires the debt management company pay the creditors within 15 days of receiving funds from their clients.
Debt Settlement Consumer Protection Act
This act deals with companies that solely work with your creditors to settle your existing debt for less than you owe. This act limits the initial fee charged by these companies as well as the percentage of the settlement fee they may retain. The initial fee is $50 maximum. The settlement percentage is capped at 15% of the total savings they obtained for their client.
Debt is a growing problem across the United States. Every month more and more people find themselves further behind on their bills. If you find yourself unable to meet your monthly debt payments it may be time to think about debt relief.