Paying off debt on your own can be challenging, especially if you don’t have the time to negotiate with creditors. Luckily, debt relief companies are here to help. Their years of experience and existing relationships with creditors make it easier to resolve everyone’s unique situation. It is important to thoroughly research your options when choosing a debt relief company.
Understanding Debt Relief
Debt relief consists of various strategies designed to make the repayment process smoother for the borrower. The right solution depends on the type of debt you owe and what you need the most help with. Your debt must be unsecured, meaning it doesn’t require collateral.
A few examples of unsecured debt are:
- Credit cards
- Personal loans
- Lines of credit
- Medical bills
- Business debts
- Certain student debts
Keep in mind that not everyone qualifies for debt relief. If you have a low credit score, or don’t have an income and can’t save money, you should seek other options such as:
- Self-payment initiative
- Credit counseling
- Debt consolidation
Calling for a free consultation is typically the first step in choosing a debt relief company. Once you choose the company that can best suit your needs, they will provide you with a customized, affordable monthly payment plan.
Debt specialists handle the rest by negotiating with credit card issuers and banks on your behalf. With a good debt relief company, you may pay a fraction of what you owe. You could become debt free in as little as 24-48 months if you decide to go this route, depending on the program and your debt amount.
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What To Consider
Your debt type and amount
Start by assessing your situation and the amount of debt you have. Debt relief companies typically have requirements on the minimum and maximum amounts they can work with, so make sure your amount meets the requirements. Consider what types of debt you owe. Is it all credit card debt? Medical bills? Personal loan debt? A mix?
Focus on companies that can best help with your particular situation. Credit card debt is one of the most common debt types, but there are other categories you may fall under. If you are in debt due to a divorce, for example, find companies that are known to specialize in divorce-related debt. If you are a veteran facing financial challenges, find ones that understand military debt.
How soon are you looking to be debt-free? Despite some debt relief companies highlighting a rather short program timeline, paying it off usually isn’t a quick process. Depending on the amount of debt you have, it could take two to four years with the help of a program.
Of course, this is all dependent on your individual situation. A good debt relief program will work with you to create a plan that is affordable and achievable within a reasonable timeline.
It is also important to consider what current or past clients have to say about the debt relief company they worked with. Look through the online reviews and testimonials to get an idea of overall satisfaction levels. These are usually found on the company website or on third-party review sites like Top Consumer Reviews or TrustPilot. You can also use Google Maps for reviews on local businesses.
You should also look for third-party organizations that provide information on any companies you are considering. The Better Business Bureau (BBB) site is a great place to start, because it provides a rating, reviews and background information. On this page, you can also find their contact information and see how long they have been in business.
Unfortunately, there are many fraudulent scammers out there on the prowl for individuals drowning in debt.
Signs of a debt relief scam include:
- Upfront fees – Many disreputable companies will charge a nonrefundable fee upfront regardless of whether they are able to help you or not. In many cases, they lack the expertise to properly negotiate on your behalf, causing you to remain in debt and lose more money.
- Unrealistic promises – Do the promises an organization is making seem too good to be true? In most cases, they are. Their goal is to grab your attention and lure you in with unrealistic timelines and false solutions.
- A “one-size-fits-all” approach – Everyone’s debt situation is unique—one person may be overwhelmed with medical bills while another is close to filing for bankruptcy due to credit card debt. There are also other factors to consider such as income, interest rates and personal goals. If a company isn’t offering you a customized debt management plan, they are most likely not reputable.
Making the right choice
Paying off debt can drastically change your life for the better, but not everyone can do it on their own. Therefore, it is important to conduct thorough research and choose a reputable debt relief program that can best accommodate your financial situation.