Tips to Help Relieve Debt

When you are looking for debt relief, knowing you available options may save you time and money. Programs such as credit counseling and debt management plans help with negotiating a resolution. Budgeting is an important part of debt relief. According to the Federal Trade Commission, the first step in taking control of your financial situation is to do a realistic assessment of how much money you take in and how much money you spend.

Credit counseling

Credit counseling and debt relief services are an option if you have trouble maintaining your budget or establishing repayment plans with your creditor. Nonprofit credit counseling organizations extends relief services to individuals with low-to-moderate credit problems. Although these organizations are typically nonprofits, it doesn't mean they won't charge. Ask your representative about any fees associated with their services.

Debt Management Plan

Debt management plans are not consider credit counseling, according to the Federal Trade Commission. DMPs are designed for individuals with moderate-to-severe credit problems. A DMP is established by setting you up with a private bank account for regular deposits; once your account reaches a certain level, professionals negotiate on your behalf in an attempt to satisfy your debt. A successful debt management plan takes about 48 months.

Budgeting Software

Creating and sticking to a budget is a reliable way to avoid debt problems. Personal money management software helps individuals who do not have a lot of debt problems, but need to get their financial situation in order. Software solutions show you a picture of your spending habits and problem areas within your finances. According to the Federal Trade Commission, the use of budgeting software helps you maintain a budget.

Bankruptcy

Bankruptcy is often considered the last option for relieving debt. There are essentially two types of personal bankruptcy: Chapter 13 and Chapter 7. Both types of bankruptcy may get rid of unsecured debts, according to the Federal Trade Commission. If you are considering bankruptcy, you must file with a federal bankruptcy court, and could cost you hundreds of dollars. Bankruptcy is a long and tedious process, but resolves certain financial problems such as repossessions, utility shut-offs, foreclosures and debt collection agencies.