High levels of debt can be stressful and difficult to overcome, especially when you feel as if you have few viable options. Proactive consumers often can negotiate feasible repayment terms with lenders, such as reduced monthly payments or additional time. But when your own actions come up short, you might ask, "How can a debt relief provider help me with debt?"
Third-party debt relief services vary in scope, approach, and integrity. Before choosing a service to help you get out of debt, make sure you understand the differences among the various types of credit counseling and debt negotiation services. Also, make sure you can identify potentially fraudulent debt relief providers, which often ask for payment up front or make promises that sound too good to be true.
Learn more about Debt Relief.
Consumer credit counseling agencies typically provide a broad range of different services, including debt management education and direct communication with creditors. Many of them are nonprofit. Look for an agency that is licensed and/or accredited in your state by checking the database of approved credit counseling agencies maintained by the Department of Justice.
Once you find an approved credit counseling agency, make sure to take the following actions:
Ordinarily, the initial meeting with a credit counselor will last at least an hour, with periodic follow-up sessions (if necessary). Agencies may provide money management tips, advise you on how to make a budget, help you develop a personalized plan to get out of debt, and even negotiate lower interest rates or term extensions with your creditors.
See Credit Counseling and Counseling Organizations to learn more.
Debt negotiation companies, also referred to as debt settlement companies, may negotiate with your creditors on your behalf to lower the total amount of debt owed, usually for an upfront fee or a percentage of your savings. While the use of these services can hurt your consumer credit score, the Federal Trade Commission (FTC) and consumer advocacy organizations warn that many of these services are not legitimate and have been known to keep the upfront fee without ever actually contacting your creditors.
The FTC, the Better Business Bureau, and other organizations therefore advise consumers to work with approved credit counseling agencies and/or negotiate directly with creditors.
A debt consolidation company is a type of debt settlement service that combines several debts into one, allowing you to pay the company one monthly fee that is lower than what you otherwise would pay. While this may seem like a simplified solution to the weekly or daily barrage of bills, the use of such services often comes with hidden fees and exorbitant interest rates that can make your debt even more expensive in the long term.
Under federal laws, debt relief services must provide you with the following disclosures before you pay any fees:
Unfortunately, there are quite a few unscrupulous organizations and individuals willing to take advantage of debtors, who too often are willing to believe anyone promising a simple fix. If a debt relief provider automatically promises an easy solution to your problem after you ask, "Can you help me with debt?" then it may not be a reputable company. Here are some of the more common signs of a possible debt relief scam:
See Avoiding Credit Repair and Credit Counseling Scams for more details.
If you still want to know how a debt relief provider can help you with debt, consider speaking with a bankruptcy attorney in your area.