Find the Best Debt Consolidation in Madison, WI

What to look for in a debt relief company in Madison

Many debt relief companies require you to owe a specific amount of unsecured debt, so it’s essential to find one that works with the amount you owe. Minimum debt requirements vary by company — some debt relief companies only work with customers who have more than $7,500 or $10,000 of unsecured debt. Debt from car loans and mortgages do not qualify for debt relief.

For some Madison residents, debt consolidation, which combines your debts into one monthly payment at a lower interest rate, may be the way to go. Debt consolidation typically involves taking out a loan to pay off your existing debt.

For residents having a difficult time making their minimum payments, debt settlement may be a better option. During debt settlement, you stop making payments to your creditors and instead pay into a specific account. The debt settlement company uses the funds in that account to negotiate with your creditors in an attempt to settle your debts for less than you owe.

Filing for bankruptcy should be a last resort — it can hurt your credit score and affect your finances for years to come.

Debt settlement vs. debt consolidation in Madison

Your financial situation determines whether debt consolidation or debt settlement services are right for you. Some companies only offer debt consolidation, while some specialize in debt settlement. However, many companies in Madison handle both, and some provide additional debt relief services, such as credit counseling.

If you’re not sure what kind of debt relief you need, look for a full-service company that can help you decide the best option for your situation.

To qualify for a debt consolidation loan, you typically need a credit score of at least 580, but some debt consolidation companies may require a higher score. Debt settlement companies do not have a credit score requirement.

Debt relief costs in Madison

Debt consolidation often requires taking out a new loan that pays off your existing debts, so your cost is the interest of that loan. Interest rates on debt consolidation loans typically range between 8% and 30%. Debt consolidation companies might also charge an origination fee between 1% to 5% of the total loan amount.

With debt settlement services, the cost is anywhere between 15% to 25% of the debt amount you owe, though some companies charge a percentage of the amount of money they save for you through negotiation.

Madison debt relief FAQ

Do debt relief companies hurt your credit score?

It depends on the type of debt relief program. Debt settlement typically lowers your credit score because the process requires you to stop paying your creditors until the debt relief company negotiates a settlement. Missed payments can stay on your credit report for up to seven years.

Taking out a debt consolidation loan, like any other loan, may hurt your credit in the short-term, but your credit score should stay the same or increase as long as you make on-time payments.

What questions should I ask a debt relief company?

Some questions to ask a debt settlement or debt consolidation company representative include:

• What are your fees?
• How long does the debt settlement process take and how much does it cost?
• Do you make monthly payments to creditors on my behalf?
• Can you calculate my estimated savings?
• Where is my money held during settlement negotiations?
• How often will I hear from you?
• How can I contact you?

Can I get a loan after debt settlement?

It depends. Because debt settlement requires you to stop making payments on your debts, it may impact your credit score, which in turn affects your ability to qualify for a loan.

Is debt consolidation risky?

Yes, it can be risky. If you make late payments, miss payments or continue to rack up debt while you’re paying off your debt consolidation loan, your credit score decreases.

Is debt relief a good idea?

Depending on your circumstances, a debt relief company can reduce the amount of debt you owe or help you pay it off more easily. If you have a large amount of debt that you’re struggling to make payments on or you want to save money by consolidating it at a lower interest rate, you should consider working with a debt relief company.