When you have a large amount of debt, there are a number of options you can pursue. One solution that many turn to is help from a debt counseling company. If you are considering using a debt counseling service to help get out from under your pile of debt, there are a few things to consider first.
Debt Counseling Companies
A debt counseling company will provide you with a number of services to help you get out of debt. These are often nonprofit organizations that offer counseling and other solutions. Debt counseling companies may offer help over the phone, in person or online. Good debt counseling services generally have trained professionals who can help you figure out your options and then set up a plan to get out of debt over the long term. When you sign up for help with a debt counseling service, you will generally have to pay a fee if you decide to join its program.
Debt Management Plan
One of the key features of a debt counseling service is the debt management plan. While you may not be required to join a debt management plan, it is usually one of the best options. With a debt management plan, you allow the debt counseling service to negotiate lower interest rates on your credit accounts. Then you make a payment to the counseling service once a month. At that point, the counseling service will pay all of your creditors on your behalf.
Other Options
If you find the debt management payments are more than you can afford, ask the debt counselors instead about debt settlement or bankruptcy. Both these options will hurt your credit, but they can eliminate the debt quickly.
Caution
Although there are many legitimate debt counseling services, some are scams. The Federal Trade Commission tracks companies that try to take advantage of consumers, but there are always new companies being started. Before working with a debt counseling service, find out more information about it. Check with the Better Business Bureau to find out if the company has any complaints against it. If a company asks for a large upfront fee, be skeptical.
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