Selecting a Debt Relief Service

Regardless of whether the economy is booming or depressed it can be easy to fall into a routine of overspending that will quickly leave you with more debt than you can handle. Even those who may have started out with an educated plan for budgeting and managing money can find themselves in need of debt relief. Anyone in this situation shouldn’t feel ashamed or defeated. Almost everyone these days — including the government — is in the same boat and the sheer number of debt relief services and credit counseling agencies doing a thriving business attest to that fact.

Step One

The first step when you realize you need debt help is to stop the overspending. Get a grip on necessary expenditures immediately and don’t pay out a dime on anything else. Then as soon as possible find a debt relief service and get into a program that will best serve your needs. Since there are many companies out there who offer debt help you shouldn’t go with the first one you come across. Different companies offer different types of debt help through different programs.

You need to understand the differences, how each one will affect your credit rating and what the companies charge. Even the ones that are “non-profit” will require a modest fee to help you with your debt situation. Do a little research. Find out which one is most affordable and offers the debt relief program that you’re most comfortable with and be sure to check with the Better Business Bureau to see that the company you want to go with is legitimate and has a track record for delivering on their promises.

Settlement Options

One type of debt relief service is debt settlement. Companies who offer this service act as a negotiator between you and your creditors. They contact those whom you owe to reach an agreement to settle your debt at a lower amount than you owe. Typically if you were to contact a credit card company or bank to tell them that you aren’t in a situation that would allow you to repay what you owe they wouldn’t be very cooperative.

But companies experienced in debt settlement know how to reach an amicable agreement with creditors that will reduce the amount you owe. Settlement usually means lump-sum payoffs so it’s a useful option if you can manage lump sums to pay off your debts. The good news is that this can typically be done one debt at a time, giving you the chance to accumulate the money for the payoffs. Also, many settlement companies charge no up-front fees meaning you’ll be able to bring your debt situation under control before owing someone else.

Counseling and Repayment

Credit counseling companies who have repayment programs are especially beneficial when you need debt help if you owe several creditors. Like the settlement companies counseling companies contact your creditors and negotiate a repayment plan that, while it won’t reduce the amount you owe, typically reduces the interest on your debts and the amount of your monthly payments. This can negatively affect your credit rating initially but will actually end up raising your credit score in the end after you’ve paid off the debts as agreed. After repayment has been negotiated with all creditors you start making one monthly payment to the credit counseling agency that they divide up and disburse to the individual creditors.

Counseling companies don’t charge up-front fees but will include their charges with the monthly payment that you make to them. These agencies also offer educational services that help you understand how to responsibly use credit and manage your money so that going forward after resolving your debt problem you’ll be less likely to fall into the same debt problems again.


Consolidating your debts is an option similar to the counseling and repayment option. The difference is that you may be able to consolidate your debts into one loan through your bank or credit union. If your credit isn’t up to par enough that a bank will extend a loan to you there are consolidation companies that will pool your debts together into one loan, usually with a low interest rate, and at a payment that is lower than your separate payments combined. These companies, like the counseling services, include their fees inside your monthly payments and, also like with the counseling services, consolidating your debts will benefit you credit rating because paying your consolidated debt off as agreed will raise your credit score.


When searching for a debt relief service there is a possibility that you may not feel any of these options are the right one for you. If you decide against debt help through a professional company there is always the option of bankruptcy. Going that route is an extreme but in some circumstances it can be the best option. Bankruptcy lawyers usually offer a free consultation to review your financial situation and offer their advice. If you end up deciding on bankruptcy be prepared to pay the lawyer’s fee in advance and to spend the next seven or more years with the bankruptcy as a negative mark on your credit report.

If you aren’t yet in a dire situation that calls for debt help, take stock of your financial position. Be honest with yourself in determining if you are headed for debt trouble. The good news is that at any time you can reverse your status. Being fully aware of your financial situation and tacking problems head on is always best.

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