Debt Relief Help Information

When you have a significant amount of debt to deal with, you might be interested in pursuing one of several options. You could try a debt management plan, debt settlement or even bankruptcy, depending on the severity of your circumstances. Working with a debt relief company could help you with this endeavor, but you have to be careful which one you choose.

Debt Relief Companies

Many companies advertise that they can offer you a substantial amount of debt relief. They make promises of being able to cut your debt by a certain percent or save you thousands of dollars. While some companies in this industry are legitimate, many are scams. The Federal Trade Commission has set up specific rules to try to prevent consumers from being taken advantage of by companies in this industry. When considering working with a company, it is important to check them out first.

Debt Management Plan

When working with a debt relief company, one of the options that they might present you is a debt management plan. This is a type of payment plan that they help you set up with your creditors. The debt relief company will take a payment from you every month and then turn around and distribute the money to your creditors. The debt relief company will negotiate lower interest rates for you on your debt and can help you pay off the debt sooner. The debt relief company will also collect a fee for their services on a monthly basis.

Debt Settlement

One of the most common tactics that debt relief companies use is debt settlement. With this type of procedure, your company will negotiate a one-time settlement with your creditors. You will have to pay a lump sum of money and the creditors will then agree to settle your account for less than the total balance. This has the potential to save you a great deal of money, but it can also negatively impact your credit.

Bankruptcy

Another option you may have to consider to get relief from your debts is bankruptcy. By filing Chapter 7 bankruptcy, you can eliminate the majority of your debts at one time. If you file for Chapter 13 bankruptcy, you will set up a payment plan with the help of your bankruptcy trustee. If you are working with a debt relief company, they might recommend debt settlement or a debt management plan so that they can earn money from you. In that case, you might want to consult a bankruptcy attorney to see if bankruptcy is in your best interest.