subject: Debt Relief Options - Don't Declare Bankruptcy Before You Know Your Options [print this page] Debt Relief Options - Don't Declare Bankruptcy Before You Know Your Options
Is your debt piling up? Do you keep owing more and feel like you'll never get out of debt? You can get out of your debt. It's simply a matter of taking control of your debt, instead of letting it control you.
You see commercials all the time for companies that will help eliminate your debt in a few years or even month's time. Many of these companies can help you, but many of them are simply scams. The key is spotting which one can help and which ones you should pass up. The easiest way to tell is if the offer sounds too good to be true, it probably is. Even if they can help you slash your debt, and effective program will also require you to look at your spending and severely slash it.
The first step is decreasing your spending and living on a reasonable budget. While many people try to tackle this alone, there is help if you need it.
Credit counselors are people you talk with about your finances. They can help you identify ways you can save, help you set up a budget, and help you develop a debt repayment plan that works for you. They don't do anything to decrease the amount you owe; they just help you figure out how to pay it.
If your debt is piling up, especially if you have high interest loans, you may be able to lower your payments and get rid of your debt faster without harming your credit score too much by getting a debt consolidation loan. This is a loan that you can use to pay off all your high interest debt. The benefit is that you only have to keep track of one payment, and you can often get a lower payment by getting a lower interest rate or a longer term for payoff.
This is really only a feasible option if you haven't gotten yourself into a lot of debt trouble yet. If you have a poor credit history, you're unlikely to be able to get the loan. You may also be able to refinance larger loans and even get a home equity loan that will pay off your credit cards and tie it in with your mortgage.
If you are really in trouble, but don't want to declare bankruptcy, then debt negotiations might be your best bet. These companies talk to the credit card companies for you and work to decrease your debt amount and interest rates. This will get you out of debt faster, but will affect your credit rating.
A debt management plan is sort of like a "combo deal" between the two previous options. You give the debt manager money for all your bills and they pay your creditors. That way you only have one payment, but they also try to talk to your creditors and negotiate a lower debt. You will obviously have to pay them, but this also doesn't hurt your credit store too badly.
If you don't want to rely on other people to help you, you can try contacting the people you owe personally. The key to talking to these companies is making it clear that you cannot pay your debt and if they don't work something out with you, they likely won't get any money.
