For some people drowning in debt, debt relief agencies are an ideal way to get back on financial track and pay off some old debts. However, if you are not careful, debt relief agencies can cause more harm than good.
Credit Score
Using a debt relief agency to pay your bills negatively impacts your credit score.
Fees
Debt relief agencies often charge you a fee for providing the service of negotiating rates and payments with your creditors. However, you can often negotiate similar rates yourself for free.
Cost
Many debt relief agencies offer loan consolidations to help you pay off your debts immediately. Over the life of the loan, however, you would pay more than if you just made the payments to your creditors as scheduled.
Credit Problems
When enrolled in a debt relief program, it may be impossible to take out any more lines of credit. This means that, if you want to apply for a new apartment, car loan or mortgage, you will be unable to get accepted while in the debt relief program.
Behaviors
A debt relief agency offers a solution to a problem, but it does not change your behavior. In order to remain debt free, you must realize your spending problems and find a way to change your behaviors when it comes to money.
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