Debt Reduction Programs – Your Options
Do you like being in debt? Do you find it makes you all giddy, and you just can’t wait to get another call from a bill collector? Yeah, right! The more you owe, the more of a hassle it is. Perhaps that’s why there is a large number of debt reduction programs; however, not all of them are created equal. Here are some things for you to consider about the various options available to you.
In today’s computer-connected world, one of the more popular options is debt reduction software. Such software can help you track all of your income and expenses, keep track of the details of what you owe, and let you see where you stand after you record any payments you make. Most programs will create a plan for you based on the information you give it. The main problem is that a lot of debt is the result of not having the discipline to properly manage money, and you will need discipline to make sure you keep the software up to date.
Sometimes we need a more hands-on approach, though, and that’s where debt counseling services come into the picture. The first thing you will need to do is fill out some paperwork. This will give the counseling service a better idea of what your exact financial situation is. They will then determine how much you need to pay for their service, but don’t worry, the charge is usually nominal, and based on your ability to pay. One of the biggest benefits is that they are able to make good deals with your creditors. This will instantly reduce the total amount you owe, and make it that much easier for you to pay off your debt.
Debt consolidation services are among some of the more popular debt reduction programs as well. This is where you combine all of your debt into one large loan, but at a lower rate than what you owe now. There are two things to be cautious of. First, not all consolidation services are honest. Some will take your money and run, and you will still owe what you owe. Second, even if they are on the up and up, it will appear that you suddenly have more spending money. Whatever you do, don’t spend it! That being said, if you can follow through, debt consolidation can save you a ton of money as you get out of debt.
The last of the programs to lower debt that we’ll talk about are debt settlement services. What these companies do is negotiate directly with your debtors. Their goal is to get you the lowest pay off price as possible. You can, technically, do this yourself, but settlement services are professionals at negotiating, and may have strong business relationships with some of your creditors. In other words, they may be able to get you a much better deal than you could get on your own.
As you can see, there are plenty of options when it comes to debt reduction programs. Choose the one that sounds best for your situation, then do what needs to be done. It may not be easy, but it will be more than worth it once you are free from the crushing burden of debt.
Which Debt Reduction Companies Are Best For You
Let’s face it, the average consumer does not like being in debt. That would certainly explain why there are so many debt reduction companies out there. While they claim to help you lower the amount you owe, you should know that there are different types of services. Knowing these differences will help you choose the company that is best for your situation.
Debt settlement companies deal directly with your creditors. What they will do is negotiate the amount you owe. The funny thing is that the further behind you are in making payments, the less your creditors are likely to take. That doesn’t mean you should purposely withhold payments just so you can get a better deal, though, as this will have a negative impact on your credit score.
What would happen if you declared bankruptcy? Then the people you owe money to would get nothing, or almost nothing (depending on which type of bankruptcy you file). So, they figure it’s in their best interest to take less than you owe, as opposed to getting nothing at all. It should also be noted that some settlements can reflect poorly on your credit report, but at least you will be out of debt.
You should understand how the debt settlement company will collect their fee before you hire them. Some charge an up front fee, while some will charge you a percentage of how much money they end up saving you. Both can work just fine, but the latter will have a stronger motivation to save you more, as it will be reflected in the amount they earn.
The next kind of debt reduction companies are debt counselors. Their main purpose is not only to lower your debt, but to also educate in the process. The idea is that by educating people, they will avoid going into debt in the future. They will help you make a budget, may help negotiate with creditors on your behalf, and offer financial training materials. Some debt counseling companies are non-profit, while others are not. However, almost all of them will charge a fee, but don’t worry as it is normally nominal, plus they will figure their payment into your budget so you won’t really notice it.
Finally we have the debt consolidation companies. They will basically take all of your debt and combine it into one, larger loan. While that may sound like it would be a huge payment, it isn’t. This is because they will find a loan that is at a lower rate than the average you are paying now. Plus, by having one payment, it will be easier to manage; as opposed to trying to keep track of several payments, you only need to make one.
Regardless of which debt reduction companies you choose, be sure to look into their credentials and qualifications. Ask several questions about what they do and how they will handle your money. While most companies work hard to help you get out of debt, there are a few that don’t, and it’s always a good idea to do a bit of checking before handing over your money to them.