Christian Debt Reduction Strategies

Trying to reduce your debt can be overwhelming and intimidating, and trying to understand all of the options only makes it worse.  However, companies offering Christian debt reduction can help you sort through the different options that can help you lower or even eliminate your debt, all within the context of Christian values.  These companies offer a variety of services and programs, not all of which will be appropriate to every situation.  Understanding your situation and the opportunities available to you is the first step toward reducing your debt.   

Credit counseling is a great place to start for almost everyone, whether you are considering filing bankruptcy, or just need some help getting your spending under control.  With credit counseling, you sit down with a licensed credit counselor who will help you develop a budget and a debt reduction plan based on your specific financial situation.  You and your credit counselor will review your income and all of your debt and other expenses to help you determine what you can afford each month.  Your credit counselor can also provide you with information about credit reports, credit scores, and wise use of credit. 

If you are finding that your monthly payments for all of your unsecured debt (debt not backed by collateral such as a car or home) are getting to be too much, your credit counselor may suggest that you enroll in a debt management plan.  With this form of debt reduction, you and your credit counselor determine a reasonable total amount that you can pay toward all of your unsecured debts, and then your credit counselor negotiates lower monthly payments with each of your creditors.  You deposit the agreed upon amount into a savings account and then your credit counselor uses this money to pay your creditors each month. With a debt management plan, you can expect to be out of debt within 3 to 5 years. 

Another option for lowering your monthly payments is to consolidate all of your unsecured debt into one loan.  With a debt consolidation loan, you may one payment instead of several, and you generally make those payments over a longer period of time, thus reducing the cost of the monthly payment.  One way to secure such a loan is by using the value of your home as collateral.  This method tends to lead to lower interest rates.  Another option is to have a debt consolidation company purchase your debts at a discounted rate, and then give you a new unsecured loan to pay back the remainder. Many Christian debt reduction companies can provide this service. 

If you are unable to enroll in a debt management plan, or enrolling in the plan would not lower your monthly payments enough, and you cannot qualify for a debt consolidation loan, then you may want to consider debt negotiation; however, do so carefully.  With debt negotiation, or debt settlement, as it is sometimes known, you stop paying your creditors and begin putting money into a separate trust set up a debt negotiation company.  Once you have accumulated between 25 and 50% of the remaining balances, your debt negotiation company begins the settlement process with your creditors.  Reputable companies will be able to reach a settlement of 25 to 50% of total balance due very quickly.  However, as you work to accumulate funds, your accounts become delinquent and this is reflected on your credit report.  If, however, your accounts have already become delinquent, or have been written off by your creditors, then this may be a good option for you.  

These choices are offered by both Christian and secular companies; however, with debt reduction you work with people who share your values and the overarching perspective that paying back your debts is part of your obligation as a follower of Christ. The credit counselors will help frame your decision in the context of Biblical principals, and may encourage prayer as a tool to help you make the best decision. They may even offer to include you in their prayers. Some of the organizations also work directly with local churches, giving you further assurance that they are legitimate companies that are focused on helping you get out of debt.

When you are overwhelmed by debt, it can be helpful to work with people who share your values, which can be found at Christian debt reduction companies.