Summary: Can Debt Eraser really turn your financial past into history? Find out how debt consolidation and debt counseling works in this Debt Eraser review.
Are you falling behind on mortgage payments, student loans, or credit card debt? If so, It may be time to enlist a professional to help you manage your debt. We all know late loan payments attract penalties, fees, and a low credit score, but there's also a risk of having to deal with nagging debt collectors.
Debt Eraser is a financial service provider you need to help you repay your debt and repair your credit score. The company claims to have considerable experience in assisting customers in managing debt and regaining financial freedom; however, their online reviews should also be considered. Continue reading for our final review of the company.
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Who is Debt Eraser?
Debt Eraser is a South-African financial service provider based in Durban. The company was established in 2001 to provide debt management solutions to customers. Debt Eraser has a team of experts who claim to analyze debtors' accounts and give them the best advice to help them become debt-free.
This company appears to stand out because of its quick turnaround time. Once the professionals receive your application, they claim to provide feedback immediately. Debt Eraser claims to help customers manage debt using either of the following two methods:
- Debt consolidation
- Debt counseling
What You Should Know About Debt Consolidation
Debt consolidation is the combination of multiple debts into one monthly payment, which is then paid off using a new credit card or loan. Debt Eraser professionals often suggest this method to help debtors manage debt.
They aim to roll the debtor's debts into one account, leaving the debtor to make a single payment at the end of every month. The idea is to consolidate multiple debt payments into one and reduce the interest to a more affordable rate.
Example:
Debtor A has multiple credit card balances and small loans with separate monthly payments and interest rates:
- Credit card X: $ 3,500, 24.90% APR
- Credit card Y: $2,500, 18.90% APR
- Credit card Z: $1,500, 12.00% APR
Debt Eraser experts attempt to consolidate the three balances into one loan that requires one payment per month instead of multiple individual balances. In this case, the experts can help you take out a new loan equal to the sum of the total debt ($7,500) with a lower interest rate, say approximately 7% APR. Depending on the lender and your credit score, the monthly interest is reduced to $1,120.80. By comparison, if 4% is charged on each separate card, you would pay $5,440 more in interest payments and take up to 12 years to pay off the debt.
Pros of debt consolidation:
- Reduced interest rate
- Reduced overall monthly payments
- It makes it easy to manage expenses.
Cons of debt consolidation
- Long repayment term
- You might not qualify for a low-interest rate.
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How Debt Counseling Works
Terms like debt settlement, debt management, and debt consolidation can be confusing for many debtors. Understanding what they mean and their pros and cons is critical when choosing the right option.
Debt counseling is a process that allows counselors to explain all of your options and help you negotiate flexible debt repayment terms based on your situation. At Debt Eraser, the counselors should help you choose a suitable debt management alternative and walk you through the negotiation process. The terms may involve negotiating lower interest rates, postponing loan repayments, and extending loan terms.
Pros of debt counseling
- Prevents creditors from taking legal action: Debt counseling determines whether you qualify for debt review. During this period, creditors can't sue you or perform any other debt collection activity until you've been deemed over-indebted.
- No permanent record on your credit report: Once you're declared over-indebted, you qualify for a debt review. This information is included on your credit report but is removed once the review process is complete.
- Debt repayment is simplified to one monthly payment: After the counseling sessions and a repayment plan has been set up, you only need to make one monthly payment to the agency that pays the creditors.
Cons of debt counseling
- You can't access new credit during the counseling process.
- You might not qualify for a debt review after the counseling session.
- If a creditor has already filed a lawsuit, this debt is excluded from the review process.
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Debt Eraser's 5-Step Approach
The company claims that its primary goal is to provide the best debt management solution to its customers. It manages to do this via a five-step process:
1. Perform a Debt Assessment
One of Debt Eraser's counselors analyzes your debts and helps you choose the best debt management plan. The plan should be tailored to your needs, income, and credit score to avoid defaulting on a payment.
2. Negotiate with Lenders to Pay Off Debt
The counselor then proceeds to negotiate with all of your creditors on your behalf. They could agree to an extended payment period, reduce the interest rate, or a lower monthly payment depending on your debt management plan.
3. Get a Court Order to Protect Your Assets
Some creditors are notorious for obtaining court orders to garnish the debtor's wages or attach a lien to their property even after negotiating payment plans. Debt Eraser counselors will help you receive a court order to enforce the agreed payment terms to avoid this. The court order also protects your property and other valuable possessions from being confiscated to pay the debt.
4. Follow Up to Review Your Budget Regularly
The financial service provider then follows up with clients by educating them on the best financial planning practices, including weekly and monthly budget planning. The experts also help you choose a suitable debt rehabilitation plan via debt consolidation or debt settlement.
The rule-of-thumb is to choose a plan that helps you pay the debt while also allowing you to live a reasonable lifestyle. The counselors then oversee your income management to ensure you meet your agreed debt rehabilitation plan's obligations.
5. See How Payments Are Distributed With Transparency
If you have decided to consolidate debt, the financial provider will illustrate how the monthly payments are distributed to creditors. Debt Eraser provides this information to all its clients during the individual AfterCare Education Sessions.
Our Final Verdict on Debt Eraser
Debt Eraser promises many benefits to customers. Sadly, the majority of customers who have approached them report that the company is unreliable. The main problem is the company's inability to remit payments to creditors and listing debtors without their consent. On a scale of one to five, we'd give it a one.
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