4 Secrets Debt Relief Programs Don’t Want You to Know (Plus 3 Alternatives)

You’re 30, 60 or maybe even 180 days late on your credit card payments.

Creditors are calling, interest is building and your stress is through the roof.

Then, you see an ad for a company that can seemingly make it all go away — a company that’ll finally get you some much-needed relief from your credit card debt.

What Is a Credit Card Debt Relief Program?

Credit card debt relief isn’t an official term used in the finance industry. It’s a marketing term that debt settlement companies use to play to indebted people’s desire for relief.

The term can be interchangeable with debt forgiveness, debt settlement or debt negotiation. What differentiates debt relief programs is that they’re set up by a company that does the hard work for you.

You may have seen their ads in the mail, on TV or in sidebars while searching the internet. They promise to lower your debt burden, help you avoid bankruptcy and hold your hand every step of the way. The offer sounds really enticing.

But as with anything that sounds too good to be true, there are some strings attached. Here are four things you should know about credit card debt relief programs before you join one.

1. A Debt Relief Program Will Hurt Your Credit

The program works in four steps:

  1. You make payments to the debt settlement company that go into an FDIC-insured savings account.
  2. Once that account is at a certain amount, they will start negotiating your debt.
  3. They contact you for your approval of the negotiated settlement.
  4. They pay that settlement and move on to the next debt.

In the first three steps, your debt relief company will not be making payments on your debts. The primary goal of debt relief programs is to negotiate lower settlements. Continuing to not make payments helps them achieve that goal. But depending on how large your debts are, those steps can take years — and during that time, your credit score continues to drop.

You’ll even keep receiving calls from creditors.

2. They Can’t Guarantee Success in Negotiating Your Debt Down

If you see the word ”guarantee” anywhere in a company’s marketing materials, run for the hills. No one can guarantee any level of forgiveness when it comes to debt.

In general, debt settlement companies do have a good track record in negotiating down debt, because they have insight into a lot of different creditors and previous settlements. But every case is different, and you can’t assume someone else’s success will assure your own.

3. You’ll Have to Pay Taxes on the Forgiven Amount

Contrary to what some believe, the government has no debt relief program. In fact, if you do receive debt relief, they’d like to be compensated for it. You’ll pay taxes on your forgiven debt.

Here’s how to figure out what taxes you might owe:

Let’s say you owe $ 20,000 in credit card debt. First, someone will asses the fair market value of the assets accumulated through that debt. Due to depreciation, that value is likely to be less than $ 20,000. Let’s say it’s $ 17,000. They won’t take your stuff, but hypothetically, if the creditors came and took those assets as repayment, you’d still be $ 3,000 short.

The debt relief program then negotiates $ 5,000 off your bill. You now owe $ 15,000. Woohoo! You’ll be responsible for paying income tax — between 10% and 37%, based on your income — on the difference between the forgiveness amount and what you owed after the value assessment. In this case, $ 2,000.

And that’s just a simple example. It can be unreasonably complicated to figure out what you’ll actually owe in taxes after debt forgiveness, so it’s advisable to hire an accountant to help you with it. (Another expense you’ll have to eat.)

4. They Don’t Work for Free

While debt settlement companies that market their services are now banned from collecting fees from consumers before settling or reducing the consumers’ debt, they still don’t work for free.

Debt settlement companies will charge you on a percentage basis — usually, a portion of your total debt or of the amount forgiven.

Debt Relief Program Alternatives

If you’re ready to pay off your debt, there are alternatives to debt relief programs that can lower interest rates, eliminate fees and improve your financial picture as a whole.

1. Debt Management Plan

A debt management plan, usually offered from a credit union or nonprofit financial organization, is a voluntary program that allows you to pay funds to your credit counseling agency each month. They send those funds directly to your creditors — no savings account involved.

While debt relief programs hurt your credit score, a debt management plan can actually improve your score throughout the 30-60 month program.

You can find accredited credit counselors from the National Foundation for Credit Counseling or the Financial Counseling Association of America.

2. Debt Consolidation

Most debt relief programs won’t accept clients with less than $ 10,000 in debt. If you fall below this figure, a personal loan or balance transfer credit card might be good options for you.

Many types of credit card debt consolidation can lower your interest rate — sometimes down to 0% for up to 18 months — and help you avoid fees. But you have to be ready to commit to paying off your debt within the terms of the loan or card.

3. Do It Yourself

You don’t need a third party to negotiate and settle your debt for you. In fact, many people do it themselves.

It’s not a walk in the park, though. You have to save up money to make lump-sum payments, and it will also do bad things to your credit while you’re in negotiations.

Whatever way you choose to pay off your credit card debt, it pays to be informed on the risks and rewards associated with the different methods.

Do your due diligence and you’ll avoid being scammed on the path to freedom from debt.

Jen Smith is a staff writer at The Penny Hoarder. She and her husband paid off $ 78,000 of debt in less than two years on two less-than-average salaries. She gives money-saving and debt-payoff tips on Instagram at @modernfrugality.

This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.

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When is Red Nose Day 2019, where can you buy a red nose and is Comic Relief on every year?

RED Nose Day is coming back for another year and promises to deliver a night full of fun and laughter.

Here’s everything you need to know about the 2019 fundraiser including the host and where you can buy a red nose.

Comic Relief is returning for another day
BBC

When is Red Nose Day 2019?

The Comic Relief telethon has been confirmed to air on BBC One on Friday, March 15, 2019

It usually starts around 7 pm and runs right through to 2.30am on the Saturday morning.

It briefly switches to BBC Two when coverage on BBC One breaks News At Ten from 10 pm to 10.40pm.

This broadcast information is still to be confirmed.

Who will be hosting Red Nose Day 2019?

The presenting duties is usually split among some of Britain’s best comedians, actors and TV hosts.

Sir Lenny Henry, who is one of the founding members of the Red Nose Day telethon, is normally the main presenter of the night – but this is yet to be confirmed.

The star line-up for the evening also hasn’t been released yet.

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Is Red Nose Day on every year?

Comic Relief is a biennial event which means it only takes place every other year.

It used to be held annually until 2002 when Sport Relief was introduced.

Now, Comic Relief falls on odd years, whilst Sport Relief happens in even years – like 2018.

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Where can you buy a Red Nose?

This Red Nose Day they’ve got eleven new Red Noses in special surprise boxes.

Well, nine red ones, a Rare green one and an Ultra rare one which you can turn upside down.

You need to head to Sainsbury’s or Oxfam to pick up your red noses this year.

Alternatively, you can get them at the Red Nose Day online store.

They cost £1.25 each.

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Is there going to be a Four Weddings and a Funeral sequel for Comic Relief?

Rom-com fans everywhere will rejoice at the news of a reunion of one of the all-time most beloved films in the genre.

The short film, which will be called One Red Nose Day And A Wedding, is for Red Nose Day 2019.

The one-off special follows the success of 2017’s Red Nose Day Actually based on 2003’s international hit film Love Actually.

Filming began on December 14, 2018 and it was revealed that Lily James would be playing Hugh Grant’s daughter and he would be giving her away at her wedding.


Where does the money from Comic Relief go?

Comic Relief spends the money that is raised through Red Nose Day and Sport Relief on disadvantaged people living in the UK and around the world.

Over the last 30 years over £1billion has been raised for the charity.

The Comic Relief charity is UK based and aims to free the world from poverty.

It has also backed campaigns to help disabled people get back into work and to highlight abuse of the elderly.


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But at least Bill Cosby was found guilty, right?

‘I have had a tough week because of the Kavanaugh thing and I really am an activist that is behind women because I was not believed in the beginning. You have to believe the women, so I am going to keep my fight going.’

She went on to share that ‘I am still suing Cosby in a civil case, even if my attorney Lisa Bloom has to go to prison to take his deposition. But, you know what, I feel vindicated. We came out on top and it was just really a good thing for all women for the biggest serial rapist in the United States history gets taken away in handcuffs.’

The outlet’s reporter was curious to know how she reacted when learning about Cosby’s verdict.

‘I just laughed. Others cried. I was laughing just with joy and relief that he will not be able to do that to another woman,’ Dickinson responded.

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