A lot of Americans nowadays need the help of debt relief programs because of rising costs and the economic downturn. There are many options you can choose to employ as you try to become more financially stable.
Beware of Scams
Scam artists are aware that people who need to attend debt consolidation programs are willing to do almost anything to eliminate debt. These scammers, whether acting as individuals or organizations, will tell you what you want to hear so they can get your money, and then don't follow through on their promise. To protect yourself from them, check if their website has the Better Business Bureau (BBB) logo. You can also try looking up "debt relief scams" by doing a search online.
First Alternative: Do It Yourself
You have a number of options when it comes to choosing debt relief programs. Your first option would be to deal with creditors on your own. Whether you are dealing with IRS debt relief or credit card debt collectors, the rule of thumb is to be honest with them and to talk to them as soon as possible. This keeps you from being labeled as "bad" by your creditors. Construct a monthly budget which shows the money you earn and the money you spend, and show it to your creditors. Your openness on this matter will help them to see that your non-payment is because you cannot afford to pay them without sacrificing money for food, housing, clothing and transportation, and not because you don't want to pay them. Creditors are in fact aware that you will not be able to repay them if you have no house, clothes, food or transportation. Majority of creditors are willing to create a plan with you that will allow you to pay off your debt while still being able to pay for your other monthly expenses.
Second Alternative: Employ a Debt Settlement Firm
If you are the kind of person who has trouble dealing with creditors, you should consider to join debt consolidation programs offered by debt settlement firms. Basically, you hire an individual, who may be a lawyer who deals specifically with debt negotiation, or a company to deal with creditors in your name. They will take care of resolving your debt, and on occasion, they are able to negotiate and lower your debt considerably. You should be aware, however, that there are a few companies that falsely advertise themselves as debt settlement experts when they are really only after your money. Take note of the warning paragraph at the beginning of this article and make sure to ask around before you sign anything.
Third Alternative: Bankruptcy
If debt consolidation programs don't work the only option left is bankruptcy. As much as possible, people try to avoid this alternative. This is because bankruptcy, which includes Chapter 13's "partial payback" type and Chapter 7's "liquidation" type, is a big black eye on your credit record that won't fade away for several years. Bankruptcy can also have a bad effect on your career, in some instances. But if say, you are being sued because of unpaid debt, this may be the only option you can take if you still want to keep some of your important properties such as your car, your home and even your retirement funds. If it has come to the point that you are considering this option, you should consult first with an attorney who is well-versed in bankruptcy laws. Do not rush into declaring bankruptcy. Though it is one of the debt relief programs available, it must only be taken as a last resort.