There Are Many Debt Relief Options to Help You Regain Your Financial Freedom

While the reasons for being deeply in debt vary, one feeling that is common to everyone in this situation is the feeling of helplessness and hopelessness. When you are not able to pay your bills and are falling further and further behind, it seems like a very lonely world. But that is exactly the thinking that will keep you in debt. It is important to know that there are resources and help available to make your financial situation much more manageable. Where do you start? Right at the beginning by knowing your debt relief options.

Consumer Credit Counseling. A qualified counselor will help you determine what your best next steps should be. If your debt is still at the point where you can manage it, your counselor may help you with money management skills, discuss different solutions to your current situation, and develop with you a plan to keep your financial situation from deteriorating – and to eventually become free of debt. If your debt is not manageable by you alone, your counselor may recommend one of the following choices:

Debt Management. In a debt management program, you work with a counselor to evaluate your financial situation and develop a plan for getting out of debt. Your unsecured debts are consolidated so you have one convenient monthly payment which goes to your creditors. In addition, the management firm will work with your creditors in order to reduce interest rates and fees that have accrued on your bills. This can reduce your pay-off time, as well as the total amount you pay in the long-run.

Consolidation. This is a popular method of debt control. You take out a loan that is large enough to pay off several (or all) of your debts. The benefit of this is that you have one monthly payment, and if you have a good credit score, you can find a loan with low interest rates. This means that you may pay less than you were before. This is attractive to many people, but keep in mind that the low interest rates and favorable loans are for those with good credit, which is likely not the case if you are in debt. Instead, you will be given a loan with a higher interest rate, and perhaps for less than the total of your bills. Another downside: over seventy percent of people who consolidate their loans in this way end up owing the same or more in the next few years.

Bankruptcy. This is one of the most stressful processes that a person can go through. It causes not only major financial upheaval, but emotional upheaval as well. Bankruptcy should be your absolute last resort because of the severe damage it does to your credit score and your ability to secure credit in the future. If you think that you are at this point, hold off until you speak to a qualified counselor. There may be a better way for you.

Debt Settlement. In this method of debt relief, you work with a specialized firm in order to pay each creditor in full. However, the difference between this and debt management is that the total that you owe each creditor is negotiated down. For instance, if you owe $6000 on a credit card, this may be reduced to $3000 or even $2000. You stop paying all your creditors and instead make one monthly payment into an escrow account. When you have enough funds accrued, you pay off the first creditor in full according to your new agreement. The process begins again, until you have paid off all your debts. Many people find success with this method because it reduces debt to a manageable level and takes a methodical approach to eradicating credit card, medical, and other unsecured debts.

You do have options. Which is right for you? Speak with a counselor for some debt relief tips today to determine which direction you should pursue.