A pile of unpaid credit card statements and phone calls every now and then from collection agencies can only point to a fiscal life completely out of control and threatening to become worse. It can be really difficult to get a good night’s sleep in this situation.
If you think that you really cannot manage the situation by yourself, then it is time that you investigate the high-decibel advertising promising to help you to pay off the accumulated debt quickly and get rid of creditor harassment. You need to find out all about how debt settlement works and how to find out a genuine company that will not rip you off.
Before you approach any companies, do some reading on the Internet – especially debt settlement reviews that will give you valuable insights of how it all works.
What Are the Various Types of Debt Relief?
It is very easy to get confused with all the financial jargon that companies use so it is necessary that you understand the different types of debt assistance that are available:
- A debt management company will typically negotiate with your creditors for lower rates of interest and attempt to restructure your monthly payments so that you can service the payments according to your financial capability.
- A debt consolidation company will purchase all your multiple debt and require you to make one payment per month to them instead of many to different creditors.
- A debt settlement company will negotiate the principal dues as well as get waivers off your accumulated interest and penalties so that you can achieve substantial savings.
In real life those services are often jumbled together with many companies offering all the services, so you need to keep a clear head and decide what it is that you really want. All the services rendered by the debt relief companies have their own price tags and you should be circumspect and judicious in making your selection, else you may end up by complicating your life further. Remember – your intention is to make your life simpler.
Debt Consolidation – DIY or Take Help
If you have multiple credit cards that have substantial dues accumulated and you are constantly sweating it out trying to track the monthly bill and making payments, you can try to negotiate to consolidate or settle your debts with your creditors on your own.
Find out a card issuer that has a favorable interest rate and transfer all the balances of the other cards to this card. Now you will have all the dues appearing on this card statement every month and you need to pay only a single amount per month. All you other cards will have zero outstanding and can be safely locked away or even cancelled if you think that’s the best route for self-discipline.
Depending upon the offer, you could have even saved yourself a nifty amount as many card issuers have attractive interest-free schemes for balance transfer for the first few months.
If a balance transfer is not feasible, you could negotiate for interest rate reduction and waiver of accumulated penalties. However, if you have a poor credit score or think you do not have the necessary negotiation skills you might need to access a debt relief company to do the job for you on reasonable terms.
How to Check Out Debt Settlement Companies
Once your search on the Internet has turned up a few debt relief companies that look good, you should find out if they are accredited with The Better Business Bureau and what their rating is. The BBB website has lot of information about the company, including customer reviews, complaints and litigation. Also check if the company is registered with The National Foundation of Credit Counseling or The Association of Independent Consumer Credit Counseling Agencies, as these are platforms that all reputed companies associate with to demonstrate their credibility and reputation.
Be wary of companies that align themselves to a religion or pretend to have certifications or accreditations that they do not possess. To verify whether a company is a non-profit or not, ask to examine their 501(c)(3) certificate and keep in mind that their being non-profit does not mean they do not charge for their services. Go for a company that will consolidate most of your debt and offer an interest rate that will make payments easier.