Deep In Debt: Are Debt Relief Companies a Good Idea?
The average American adult owes $8,398 on credit cards, but some people owe way more than this amount.
Do you owe a lot on your credit cards? Do you have other debts, too?
Racking up debts is never hard to do. It’s paying them off where it becomes challenging.
If you want to get out of debt but need help, you might want to turn to a debt relief company. Debt relief companies provide services for people who need help getting out of debt, and you can choose a program for help.
As you think about your options, you might be wondering if using a debt relief company is a smart move. Check out this guide to help you decide if you should hire a company like this for help.
The Services of Debt Relief Companies
Before you decide if you should use a debt relief company for help with your debt load, it might help you to understand the services they offer.
Most debt relief companies offer two primary services:
Credit Counseling and Consolidation
Debt consolidation programs are among the most prevalent types of debt relief programs you can use. Companies that offer these programs often pair them with credit counseling services.
Credit counseling is educational courses and information that teach you how to manage your money.
Taking courses in credit counseling can help you learn how to create and stick with a budget. They can also help you learn how to become financially responsible by teaching you how to track your spending and cut your expenses.
Debt consolidation involves combining all your debt into one large sum. The company you hire negotiates with your creditors for your debts. They work on lowering the interest rates on your debts and eliminating late payments and fees.
They require a monthly payment from you each month, and they use the proceeds to pay off your creditors over time.
A debt settlement is like debt consolidation in some ways but is also different. A debt settlement plan requires the company to negotiate lower balances for your debts.
They must call your creditors and work out arrangements with each one for lower amounts. For example, if you owe $3,000 on one credit card, the company might negotiate the balance down to $2,000.
You would still pay a monthly payment amount to the debt relief company, and they would use the money to pay your creditors.
Settling debt is a program that many consumers prefer because it provides a way out of debt without paying the full balances they owe.
Both options offer benefits if you find the right company for the services.
The Pros and Cons of Using a Debt Relief Program
Using a debt relief company to help offers pros and cons. The main advantage of hiring a company is the expert help they provide.
They can help you learn your options and choose the right one. They can also assist you in setting up the plan, negotiating for you, and handling all the work on your behalf.
As a result, you can get out of debt if you follow the plan according to the terms of the arrangement.
The downside of hiring a company for help is the fees they charge. These services are not free. You may have to pay an upfront fee to start a program, plus they might also charge you a monthly fee for the services.
The other downside is that you must be very cautious when choosing a company to use. There are scams out there, and you need to make sure you select a reputable company.
You Must Evaluate and Compare the Companies
So, how do you find the right company to use? This question is the most important one to answer before choosing one. You must research, evaluate, and compare companies if you expect to find the best debt relief company.
You can research companies in many ways, but a great idea is to check out the Better Business Bureau. By reading this blog, you can learn more about a business’s reputation and services.
Choosing the wrong company could result in overpaying for the fees, and the company might not even offer any help for your debt problems.
Selecting the right company offers safety and security, and it also provides a solution for your debt issues.
Some People Benefit from Handling It Themselves
One last thing to consider is that you might be able to handle your debt problems yourself. In fact, a lot of people find that they can save money by negotiating directly with their creditors.
If you don’t mind confronting your creditors with an explanation of your situation and an offer, you could give this a try.
Your creditors might be willing to work with you if you ask, but it’s helpful to know that creditors are often more willing to work with debt relief companies. You may hit a brick wall if you try this yourself, and this could cause you to give up trying.
Don’t give up, though. There are ways to get out of debt, and there are excellent, trustworthy companies out there. You need to look for them, though, and this may require some time, work, and effort.
What You Should Do Next
Evaluating and comparing the services of debt relief companies can help you learn more about their services, fees, and results. You can then decide how to proceed.
It is always essential to spend time researching your options before deciding. There are many programs to choose from, and there are lots of companies that offer debt relief services.
You can also learn more about your options in debt relief by checking out the rest of our blog.