The Ins and Outs of Debt Relief

In these financially trying times, people are faced with the burden with their debts. While the introduction of credit cards has made our lives easier in several aspects, they have also created problems at the same time. You might find yourself with a huge credit card bill, which you may not be able to pay off immediately. Once the payment is delayed, interest will have to be paid and this will make the debt larger. Likewise, debt may also rise because of the loans that people may have to take out for dealing with their needs. Either way, the burden of debt increases until people feel as if they are drowning in it.

Debt can actually turn out to be the heavy anchor that has the power to sink families and individuals. However, there is help available for those that are in desperate need of debt relief. There are different programs that can be used for this purpose, some of which involve waiver of partial debt amount or putting a halt to the process of debt growth. Nevertheless, there are some debt relief programs that have unscrupulous practices due to which they should be completely avoided. The first step that should be taken by individuals who are dealing with debt related problems is to find a certified consumer credit counselor.

They can provide people with the financial education they need, which includes advice on budget, debt and credit, debt management, delinquent mortgages, bankruptcy and home buying. People can work with a credit counselor via email, phone or even in person. The primary aim of credit counselors is to put a stop to any legal action that the creditor might be taking against an individual and to come up with a payment plan that would satisfy the demands of all the parties involved. Not only will the counselors provide debt relief, but will also offer individuals proper financial education and planning tips for dealing with the current financial crisis in order to ensure that finances can be managed in the future in a better way.

In the case of severe debt, the option that’s available to individuals is to enroll in a debt management plan in which they make monthly deposits to their credit counseling company for paying down their debt systematically. In turn, the company is responsible for distributing the payment to the creditors. Typically, a debt management plan is spread over 30 to 60 months depending on the amount of debt for it to be finally repaid to the creditors. Even though these debt management programs may seem very helpful, there are also some pitfalls that can be associated with some of them.

There are some debt relief programs, which claim to reduce the amount of debt or the interest rate that’s being charged. But, most of the time, they aren’t based on the truth and individuals are left with the same amount of debt and even a greater cost in the form of penalties and fees. People should beware of debt relief companies that claim to reduce debt by 50 to 70% or give a one-time settlement. It is best for individuals to find a reputable and well-known credit counseling agency to get the best services in regard to debt relief. They should make sure that there aren’t any complaints about the company they have selected to avoid getting scammed.