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Types of Debt Relief Programs

Debt Relief

The process of getting into debt is simple for most consumers. From credit cards to auto loans, student loans to splurge purchases, a mountain of debt can grow quickly. Unfortunately, getting out of debt can be a daunting challenge for consumers across the country. Depending on your personal financial situation, there is a debt relief strategy that can work for you. From a self-management program to enlisting the services of a debt management professional, these programs can help you gradually eliminate the role of debt on your daily life.

Credit counseling

By meeting with a credit counselor in person or on the phone, you’ll enjoy the benefit of getting advice from a credit professional. He or she will evaluate your current financial status – who you owe and how much – and can help you formulate a debt reduction strategy that fits your budget and preferences. You can think of credit counseling like “credit school,” where you’ll learn about your debts and the way they fit into the financial world. By getting credit counseling, you could receive lower interest rates from your creditors. Be sure to call and find out any benefits that could be extended to you as a result of seeking credit counseling.

Debt consolidation

A popular choice for many consumers, debt consolidation combines all your debts into a single loan. You will still owe the same amount, but instead of several monthly bills you will have the convenience of only paying one bill a month. Your creditors will be satisfied, and your new lender – your debt consolidator – will consolidate all your debts into one loan. You’ll be responsible for a single monthly payment, which will gradually pay down your debt. A consolidation loan isn’t guaranteed: you will have to apply for debt consolidation, and your monthly income, credit history and type of debt could all be factors in the type of consolidation loan you receive or whether you are approved for one at all.

Debt settlement

When your debts become too difficult to manage on your own, and a debt consolidation loan isn’t the best option, debt settlement could be a smart solution to your financial dilemma. Consumers generally choose debt settlement when their debts are too great to maintain independently, and they need the help of a third party to make creditors stop calling. By selecting a debt settlement service, you will have an impartial third party who will work with you and your creditors to try to come to an agreement – it’s almost like debt mediation. Usually, debt settlement involves negotiating a lower amount of money than the consumer owes, and that amount is immediately paid to the creditor. As a result, the debt is satisfied. Through this service, you can develop a strategy to satisfy your debts and begin the process of re-establishing your credit rating.

Debt management

In debt management, you work with a professional and develop a smart, feasible strategy for getting out of debt. Generally, your debt management company develops a plan by prioritizing your debts by the balance, term, interest rate and other factors. You then pay the management company monthly, and the company in turn begins to pay off your creditors in an orderly fashion. By using this service, you are getting the expertise of a debt management professional, while also knowing your debts are being repaid in a responsible manner.


The last resort for any consumer, bankruptcy is the process of a consumer officially declaring that he or she cannot pay creditors. Bankruptcy is an extremely serious process, one that should be done with the counsel of an expert such as an attorney. Anyone considering bankruptcy should consider the benefits and problems with it, its impact on their future credit, and which debts could be eliminated by declaring bankruptcy.

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