The goal of debt relief is to make your payments more manageable and ultimately help you become debt-free. There are a number of ways to achieve this, including credit counseling, debt management programs, debt settlement and bankruptcy. Each option has different costs and impacts on your credit, so it’s important to know what you’re getting into before taking the plunge.
Debt relief services are designed to negotiate with your creditors on your behalf and lower the amount you owe. This can be beneficial for people who struggle to meet their minimum payments or who are unable to pay their debts at all. However, if you can make regular payments on your debts or have good credit, a consolidation loan or balance transfer card could be better options for you.
In general, debt relief companies charge a fee to handle your account and may also take a portion of the money you save into a savings account that will be used to pay off your debts. According to the National Foundation for Credit Counseling, these fees can range from 15% to 25% of your enrolled debt. If you choose to work with a debt relief company, it’s best to shop around and ask about their charges and customer service reputation before signing up.
There are some debt-relief services that are actually scams, so it’s important to stay vigilant and do your research. Beware of any company that demands upfront payment or promises to settle your debts for a fraction of what you owe. You should also steer clear of any company that claims to be able to stop all debt collection calls or lawsuits against you.
Many debt relief solutions require consistent, on-time monthly payments for years, so it’s important to weigh your options carefully and ensure you can commit to them. If you can’t, you’ll end up wasting your time and may still be stuck in debt.
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