If you’re struggling under a mountain of credit card and other types of unsecured debt, you’ve likely heard of National Debt Relief. You may even have wondered whether this company could offer you a solution to help you get out from under your excessive debt and start on the road to becoming debt free. Debt consolidation is not right for everyone with bills. However, companies like National Debt Relief can help many consumers avoid bankruptcy and restructure their finances. Just what does National Debt Relief do and can you trust them? We’ll tell you what you need to know to make an informed decision about whether this company and debt consolidation is the right choice for you.
What is debt consolidation?
Debt consolidation refers to taking out a new loan to pay off your existing loans and debt. This is often advantageous because the new loan usually has better terms and a better interest rate than your existing loans and credit card balances. With debt consolidation, you pay the consolidator one time every month and they handle distributing the money to your creditors. The monthly payment is often less than paying the minimum payments on several installment loans. In addition, debt consolidators often negotiate with creditors to reduce the amount of the debt and/or have accumulated late fees removed.
What is National Debt Relief? Is it legitimate?
National Debt Relief (NDR) is an accredited debt consolidation company. The New York City-based company is legitimate and can help consumers reach debt settlement agreements with their creditors, often settling debts for less than the amount originally owed. Founded in 2008, NDR is one of the largest debt settlement companies in the United States. The company employs a team of debt arbitrators, all of whom are certified through the International Association of Professional Debt Arbitrators. National Debt Relief is also a member of the American Fair Credit Council, a professional organization whose members agree to follow an ethical code of conduct.The company has an A+ rating with the Better Business Bureau.
How does National Debt Relief work?
NDR makes it easy to work with them. In most cases, you can enroll in their program with a single telephone call. The company then verifies your debt balances with a soft credit pull (one that doesn’t affect your credit score) and makes sure that you qualify for their program. If approved, you open a new, separate savings account and make a monthly deposit determined by NPR. You are instructed to stop paying your other debt-related bills. NPR then negotiates with your creditors and (most of the time) gets them to accept less money to settle your account than you owe. If the company is able to reach an agreement with one or more of your creditors, you pay the creditor out of your savings account, either in a lump sum or in installments.
Once your account is set up, you can monitor your payments and your process via an online dashboard.
What are the requirements for working with NDR?
To qualify for NDR’s services, you need to have at least $7,500 and not more than $100,000 in qualifying debt. Some debts are excluded from the service, such as student loans; past federal, state and local taxes; and home mortgages. In addition, you must be at least several months behind in paying your bills, be able to show financial hardship and have the means to make a monthly payment to help settle your debts. According to NDR, the company’s typical customer has “between $25,000 to 30,000 in debt and has between five and seven accounts. In general, debt settlement is looked upon as a last resort to try before filing bankruptcy.
Because of state regulations, NDR cannot work with customers who live in Connecticut, Georgia, Kansas, Maine, New Hampshire, Oregon, South Carolina, Vermont and West Virginia.
Will using National Debt Relief hurt your credit?
Because you stop paying your creditors as a part of the NDR program, your credit score will take an initial hit. However, since you’ve already been late on multiple payments (or you wouldn’t be seeking the assistance of a debt settlement company), the damage will probably not be dramatic. Once your accounts are settled, your credit score will likely gradually improve (if you continue to pay your other bills on time).
How much does National Debt Relief cost?
NDR charges a fee that’s based on the amount of your debt. According to the company, fees range from 15 to 25 percent, depending on various factors such as the debt amount and laws governing debt settlements in your state. The company claims that “most clients in their program save between 30 and 50 percent off their original debt, even with (the) fees included”.
What types of debt can NDR help me with?
NDR can help you reduce and pay off your unsecured debt, such as credit card bills, payday loans, private student loans, unpaid rent, personal bank loans and medical bills. It cannot help with government-backed student loans, taxes, car payments and home mortgages. It also cannot help with debts stemming from lawsuits, utility bills,
What are the benefits of working with National Debt Relief?
The primary benefit of working with NDR is creating a path to becoming debt free without the expense, hassle and stigma of filing for bankruptcy. In addition, unlike some types of bankruptcy, working with a debt settlement company allows you to keep all of your property and belongings. By reducing your debt and having just one monthly payment for all of your debt payments, NDR makes it easier to be successful in getting rid of your debt. However, it’s important to note that debt reduction requires more effort on the part of the consumer than just making a monthly payment. To be successful in this program, you need to commit to not applying for new debt and/or adding to your existing debt with new charges. While NDR doesn’t require it, many NDR customers find it beneficial to take a money management class.
It makes sense to note that NDR doesn’t perform any service that you can’t conceivably do yourself. If you have the time, temperament and tenacity to call and negotiate with all of your creditors, you can potentially achieve the same results yourself. However, NDR’s program doesn’t require you to spend hours on the phone, produce copious financial paperwork and suffer the potential hurt of having to explain your unhealthy financial situation over and over again.
Are there any downsides?
The downsides of working with NDR (or any debt settlement company) include the expensive fees. While for many customers the fees are outweighed by the savings and are generally less expensive than going through bankruptcy, there are no guarantees. In addition, your credit score is likely to suffer in the short run, which can make getting additional credit or obtaining a home loan expensive or even impossible. Lastly, the debt settlement process is not an overnight fix. It usually takes between one and four years, depending on how much debt you have.
It’s also important to be aware that settled debts may have federal tax consequences. A creditor who settles with you for a sum that’s greater or equal to $600 less than you owe is required to send you a 1099-C tax form. There are a few exceptions to this, so it’s wise to consult a tax accountant if this applies to you.
For most people, the benefits will outweigh the downsides. However, you should be aware that your credit score is likely to take an initial hit while NDR works with your creditors and debt is written off. However, once you complete the NDR program, you’ll be debt-free (or at least be rid of your unsecured debt) and your credit score should gradually, but steadily, rise.
What happens if I drop out of the NDR program before my debt is paid off?
There are no penalties for dropping out of the NDR program before you pay off all of your debit. However, you will likely incur more fees than you’ll realize in debt savings if you don’t see the program through until the end.
The bottom line
Obviously, working with a debt settlement company only makes sense for people who have exhausted all options to catch up with their bills on their own, but who still have a job and the means to make a regular monthly payment to help settle their debts. If debt settlement makes sense for you, then National Debt Relief is one of the most reputable and one of the largest such companies in the United States.