One good way to help reduce your debt is to acquire the help of a debt relief company. However, this can be a daunting task. There are many companies out there that charge excessive fees or do not do enough to help fix your debt. This article will help you determine how to pick out the right kind of debt relief company for you.There are two main types of debt relief companies. The first type helps you with debt management, in which you meet with the credit counseling agency and work with your creditors to potentially reduce your minimum payments or improve your interest rates with an understanding that you will pay the full debt over time. The other type will work with your creditors to eliminate the debt now.
While the second type may sound better, the problem is that you may have to take out a loan backed by collateral to pay off the debt now. Sometimes you may even have to sell the collateral to pay off the debt to “eliminate” it. In either option, odds are that you will have to pay off the full value of the debt, unlike Chapter 7 bankruptcy.
The benefit of using a debt relief company is that they will save you more money than you could save on your own by negotiating with your creditors by yourself. However, you have to be sure that you find a well-qualified debt relief company – usually one that has been in the business for a long time and has a lot of contacts – and make sure it fits your budget. You do not want to pay a lot of money to a company – especially one that may not save you very much money!
Bankruptcy is a permanent process, and even though it will eliminate your debt, it will negatively affect your credit score. You may be better off meeting with a good debt relief company to determine whether bankruptcy, debt management, or debt elimination is best for you.