If you're wondering how to find the right debt relief program for your situation, it can be a little tricky. But for the millions of Americans in debt, there are solutions out there.
What Types of Programs are Available?
For those suffering from the strain of consumer debt, there are a few options to choose from. For those with a lot of unsecured debt, (any debt not supported by an underlying asset) debt consolidation could be a good choice.
Those with a sizeable amount of debt may find themselves better served by a process known as debt settlement. And some consumers may find success with a credit counseling agency. So what are these debt management programs like, and how exactly do they work?
Debt Settlement
Debt settlement may be the credit card relief program for those who are unable to repay their debts and risk default or bankruptcy. The process involves enlisting the services of a debtsettlementcompany. After speaking with an agent, and entering into an agreement, the consumer stops payments on any outstanding bills and instead puts that money towards a secured account.
As time goes on, the account grows, and after a few years, the debt settlement company will use the money in the account as leverage in negotiations with your creditors. This can result in paying less than the original total owed to your creditors and saving you money in the process.
While this process can provide benefits, there are also a few important considerations to take into account. As stoppingpayments on your debt is part of the process, yourcredit scorewill likely take a hit during the duration. Another option is known as debt consolidation.
Debt Consolidation
Another type of credit card relief program, and perhaps the best option for those with a lot of unsecured debt is debt consolidation, which takes a consumer's unsecured loans with high interest and converts them into one larger loan with a lower interest rate, and smaller payments over an extended period.
Once an individual has entered into an agreement with a debt consolidation company, they'll receive a loan, which they can then use to pay off their unsecured debts. This can often allow an individual to catch back up on what would otherwise be a steadily growing and unmanageable debt. It also helps the consumer avoid the oftentimes exorbitant fees associated with late balances on credit card accounts.
Thisdebt relief programcan also help lead to a better credit score for those who would have otherwise been unable to make payments in full on their credit card debt.
Credit Counseling
Another credit card relief program to look into is known ascredit counseling. Credit counseling services can provide you with help from a counselor certified to assist a consumer in money management strategies, budget building, and debt management.
Credit counselors can also help you get a deeper understanding of the types of debt you have and figure out your priorities in paying down and actually dealing with the debt you've accumulated. Credit counselors may also be able to work with your creditors to help find a plan that allows you to deal with your debt.
Whenever working with a credit counselor it's important to look for a reputable organization, so check with government sources and your nearest consumer protection bureau for more information.
Find the Solution That's Right for You
Whichever option you end up going with, it's important to find the solution that's right for you. Your financial situation is unique, and a program that worked for someone else might not be the best fit for you. Make sure to take the time to understand each program you're looking at, and you'll be well on your way to figuring out how to find the right debt relief program for you.
