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debt relief

Debt to Freedom Plan vs debt consolidation loans

Although we’re past a recession, countless consumers in California are still desperately struggling to pay off debts and mortgages. It’s appalling that while the Emergency Economic Stabilization Act gave hundreds of billions bailout money to U.S. banks, Californians were denied economic relief. Compounding the problem, already scarce debt consolidation loans aren’t giving needed debt relief to many debt-stricken families. But, if you’re drowning in debt, the San Diego debt relief story of Debt Free League client, Armando Gomez, brings hope.

Two years ago, Gomez, became unemployed, taking whatever odd jobs he could find to feed his family. He also drowned in credit card debt. Unfortunately, both debt consolidation loans and credit counseling plans were no match to his considerable loss in income. The painter used to earn over a $43,000 yearly salary.

NOTE: Consolidation loans, which consolidate multiple debts into one loan, give the borrower a combined monthly payment and lower interest rate, which is essentially the same benefit of a credit counseling debt management plan. However, 75% of consumers that take out debt consolidation loans go deeper into debt. Additionally, according to a Consumer Reports survey, “credit counseling debt management plans have a 79% consumer dropout rate.” Out of the dropouts, some couldn’t keep making the steep debt management plan monthly payments, which similar to or even higher than their minimum payments; others saw they weren’t getting much debt relief in just reducing their interest rates.

Gomez was upside down on his mortgage and couldn’t qualify for debt consolidation loans. Credit counseling was also out of the question. It would merely reduce the interest rate on his debt. This led to another problem, He faced the decision of not paying his credit card bill or skipping a mortgage payment. (According to the Mortgage Bankers Association, “more than 6 million homeowners were either delinquent on their payments or in foreclosure at the end of the third quarter of 2011.” )

Determined to save his home, Gomez defaulted on a $21,976 Bank of America credit card account. If you have ever been delinquent on your credit card bills, you’ll know what happened to him next…

Soon, the nasty collection calls mounted from bill collectors demanding full payment. When calls escalated into legal threats, he could no longer tolerate the unbearable pressure. Luckily, he found the Debt-to-Freedom Plan. Realizing the debt relief service provided by Debt Free League, he saw light at the end of the tunnel. Unlike a CCC debt management plan or debt consolidation loans, he;d be settling his entire debt and saving substantially on both principle and interest.

Gomez followed a debt repayment plan that fit his budget and within months, was able to negotiate a $4,650 settlement. That’s all it took to repay the credit card company and consider his total debt “paid in full.”

Gomez elates, “I learned from my experience not to get into so much debt and I thank Debt Free League very much for helping my family get out of it. I look forward to tell others in a similar situation about their services.” In January, 2012, Gomez completed a journey he thought he’d never reach. Thankfully, now that he’s debt free, he has a new lease on life.

Every person’s financial situation is different. But, graduates of the Debt-to Freedom Plan that complete all of the monthly program payments pay about 50% of their total enrolled balances before fees, or 65% including fees. When compared to repaying at least one and a half times your original debt as a borrower of debt consolidation loans or as a graduate of a credit counseling debt management plan, that’s a remarkable savings.

NOTE: The Debt-to-Freedom Plan provides debt relief for a variety of unsecured debts, including credit cards, signature loans, medical bills, and business debts. Debt Free League (1-800-213-9968 ) is a San Diego debt settlement company with highly skilled negotiators and bilingual (English/Spanish) customer service reps.

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