Finding Hope in Hardship: Understanding Your Emergency Debt Relief Options

So many of us have been there: That point when it’s all too much. The bills are piled high. You’re scared to use plastic, in case it’s declined. You’re behind on monthly payments. And you dread your phone ringing, because so many calls are from lenders or debt collectors.

The debt stress is getting to you, and you can feel it affecting your health. It’s common for money worries to contribute to mental and physical health issues.

Now is the time to consider debt relief. And, if your situation is acute, you may need emergency debt relief.

What is emergency debt relief?

Debt relief is any action that helps you regain control of unmanageable debt. “Emergency” debt relief refers to help that’s available to people going through hardship.

In a financial emergency, debt relief options can include:

• Debt consolidation

• Debt settlement

• Debt management plans

• Credit card hardship programs

• Emergency grants or loans

• Government assistance

• Student loan forbearance

• Mortgage loan modification

• Charity care (for medical debt)

• Medical debt forgiveness

• Loans from friends and family

Each type of emergency debt relief can meet a different need. Debt consolidation, for instance, can help you streamline monthly payments so your debt is more manageable. Debt settlement can help you clear your debt for less than the full amount you owe. 

During the pandemic, many credit card companies touted financial relief programs to help customers who fell behind on payments. Some of these programs are still around, and offer benefits like reduced or deferred monthly payments, and fee waivers if you can’t make your regular payment. 

The federal government, meanwhile, stepped up to offer forbearance programs for student loan borrowers, and mortgage relief for homeowners. While some programs have expired, others still provide emergency debt relief for borrowers. 

Regardless of the form it takes, emergency debt relief aims to provide immediate solutions so that your financial situation doesn't get worse before you get back on your feet. Emergency debt relief is a critical lifeline when you’re in need. 

Identifying when you need emergency debt relief

How do you know when it's time to get debt help? You may not even notice that you're in trouble with debt until it becomes completely overwhelming. 

Some reflection can help you pinpoint how serious your debt situation is. Ask these questions to gauge whether you might need emergency debt relief.

1. Do you know how much debt you have?

2. Can you make all your debt payments on time?

3. Can you (and do you) pay more than the minimum amount due?

4. Do you have an emergency fund? 

5. Have you fallen behind on any debt payments?

6. Do you live paycheck-to-paycheck?

7. Does more than half your monthly income go to debt repayment?

8. Have you taken a cash advance or payday loan to cover the bills?

9. Do you frequently play the balance transfer game to move credit card debt around?

10. Have you experienced a financial hardship that makes it difficult to manage debt? 

If you answered “no” to one or more of questions 1-4 and “yes” to additional questions, you may benefit from emergency debt relief. 

It's normal to feel discouraged when there are signs of financial trouble, but try to stay focused on solutions. Debt happens for lots of reasons, some of which we can't control. A long period of unemployment or sickness, for example, could catapult you into financial distress. What matters is that you know what you can do about it. 

Who qualifies for emergency debt relief?

Emergency debt relief is designed to help people who have an immediate and clear financial need. Debt relief programs often use different criteria to determine who is eligible for help. But generally, three things must be true:

• You must have a financial hardship situation that you can't manage on your own.

• You must be able to prove your hardship. 

• You must be below certain income thresholds if a program imposes an income limit.

What counts as financial hardship for emergency debt relief? Here are some example scenarios that could qualify you for help. 

• You're laid off from your job, cutting your household income by half. It takes you six months to find work, and that puts you behind on bills. 

• You’re diagnosed with a serious illness that requires lengthy treatment. You can't work, and medical bills pile up. 

• Your spouse, the family breadwinner, passes away and doesn't leave any life insurance behind. You struggle to pay basic expenses, and have no money left over to pay debt. 

• A hurricane causes substantial damage to your home, and your workplace shuts down temporarily. You're left with no income to cover the bills until the destruction is cleaned up. 

These are just a few situations where a hardship could leave you unable to pay your debt. Your situation doesn't have to be extreme for emergency debt relief to make sense; you just have to need help with your debt. 

Real people who got emergency debt relief

Debt relief can and does help people every day. Over the years, Freedom Debt Relief has helped millions of people resolve over $18 billion in debt and counting. If you need some inspiration to take the next step toward debt relief, it helps to read success stories of people who have overcome their financial challenges. 

• Ozzy found himself with $31,000 in credit card debt. With Freedom Debt Relief's help, he settled that debt in just a few years. 

• Patti had $17,000 in credit card debt, and didn't know where to turn. Freedom Debt Relief helped her resolve her debt, and now she's able to send extra money to savings. 

• Molly owed $27,000 to credit cards, and was tired of the high monthly payments. She turned to Freedom Debt Relief to settle her debts, and reduced her monthly payments significantly. 

• Luis had an even bigger debt burden in the years leading up to retirement. But by the time he quit work, his creditors had settled his $60,000 in debt. That lifted a huge load off his shoulders and allowed him to enjoy his golden years. Watch his video on YouTube.

Those are just some of the people who have benefited from emergency debt relief. Their situations offer some positive reassurance that even though you may be bogged down by debt now, a brighter future is possible. 

How emergency debt settlement works

Debt settlement means negotiating with creditors. You ask them to let you pay less than the full amount due and forgive the rest. You can negotiate debts on your own or work with a debt settlement professional. 

Here's how the process typically works with a debt settlement company.

• You tell the settlement company about your debts and your creditors. 

• If debt settlement is a good fit, you pay a set amount into a secure account each month. You control this account. 

• The debt settlement company negotiates with your creditors to reduce what you owe.

• When an agreement is reached and you approve it, the debt settlement company uses funds in your secure account to pay the creditor. The debt settlement company takes its fee from the same account.

• You might clear your debt for a lump sum, or your creditor might agree to a series of payments.

• Once the settlement is paid, you don't owe the creditor anything else. 

You rinse and repeat for each debt you owe. It typically takes two to four years to settle debts this way, so you need some patience for the process to work. 

Debt settlement companies do charge a fee, but it may be worth it to know that your debt may soon be under control, and that you have an expert on your side. A good debt settlement company can also offer tips and advice on managing financial hardship. 

Note that debt settlement doesn’t work for secured loans. So it can’t be used on mortgages, home equity loans, or auto loans. Federal and private student loans may be eligible for negotiation in certain circumstances. 

Red flags for debt relief scams

Debt relief scams are, unfortunately, all too common. The Federal Trade Commission warns that  “Debt relief service scams target consumers with significant debt by falsely promising to negotiate with their creditors to settle or otherwise reduce consumers' repayment obligations. These operations often charge cash-strapped consumers a large up-front fee, but then fail to help them settle or lower their debts—if they provide any service at all.”

How can you tell the good debt relief companies from the scammers? First, look for these red flags: 

• Up-front requests for payment. No reputable debt relief company will ask for payment up-front, nor will they ask you to pay via unusual methods such as Cash App or gift cards. 

• High-pressure tactics. Debt settlement companies exist to help people, not bully them. If a company uses aggressive marketing techniques (such as robocalls) or pressures you to commit, move on.

• Unrealistic promises. Scammers may tell you they can settle your debt overnight, or get you out of debt for nothing. If it sounds too good to be true, it probably is. 

• Limited presence. One sign that a debt relief company is a scam is a lack of online visibility. Scant or no information on neutral sites like the BBB or TrustPilot, or a barebones website with no social media profiles are big red flags that something is off. 

So how do you find a reputable debt relief company to work with? It starts with research. 

As you compare debt relief providers, consider:

• How long they've been in business

• How many people they claim to have helped

• What types of debt relief services they offer

• How they structure their fees, and what they charge

• Whether they're accredited by the Better Business Bureau

Transparency matters. A good debt relief company should answer any questions you have directly and thoroughly. Their services and fees should be easy to understand, and you should feel no pressure to use their services. 

It may help to browse online reviews from people who have used a particular company's services. Reviews can tell you a lot about what real-life people do or don't like about them. 

Steps to take before choosing emergency debt relief

When you have debt and decide you need help, it's good to have a plan. Here's a quick checklist of next steps. 

• Review your budget to see how much you can afford to pay toward your debt right now. 

• If you only pay the minimum due, consider where you might be able to find extra money to send to debt. 

• Call your creditors to ask about financial hardship programs and how to qualify. If you're behind on any debts, start with those first. 

• Weigh the pros and cons of debt settlement if you would like to reduce what you owe.

• Schedule a free consultation with a debt expert to discuss possible solutions for your situation. 

Debt can be a heavy burden, but you don't have to carry it alone. Debt relief is available in virtually any hardship situation to help you get back on track financially.