Throughout the United States, more and more people are finding it increasingly difficult to meet their financial obligations. Credit card debt is one of the leading causes of this problem. As a result, credit card debt relief is one of the most common forms of debt relief consumers seek. It can be as simple as calling your card company and asking for a reduction in your Annual Percentage Rate (APR), or some extra time to pay your balance. On the other hand, it could be complex as interest rates rise and credit card late fees continue to climb, adding to your debt, at which point you are forced to negotiate with your creditor. But some consumers are skeptical about the debt relief process, asking questions such as, does debt relief work? and will it work for me?
Does debt relief work? and will it work for you?
The answer is yes to both, debt relief does work and will work for you. People with high credit card and other debts are helped evry day by debt professionals to regain control of their finances. But to increase your chances of success, you must start by hiring a reputable debt relief firm to represent you. The firm should have an excellent track record of helping clients get out of debt without taking any fees until a solution is in place. The state Attorney General’s office and local consumer protection agency can provide information for you to determine if there are any consumer complaints lodged against the company you are considering, as well as, whether the company is licensed to do business in your state.
What exactly is Debt Relief?
It is the process of getting your debts under control. One way to do it is to consolidate all or some of your loans or credit card debts into one low monthly payment, which can help you get out of debt quicker, pay less interest, and help lower your monthly payments. Other forms include credit counseling, debt management plans, debt settlement, and bankruptcy. Anyone who has a debt can qualify for some relief, but it is your financial situation that will determine which form will suit your needs. The debt relief company you hire should conduct a free assessment of your finances as a first step. Then select the right program to suit your specific needs. But before you enter a debt relief program there are three basic things of which you must be aware.
But before you enter a debt relief program there are three basic things of which you must be aware.
- Debt Relief is not a do it yourself project
You always have the option to try to tackle your financial problems by yourself. For example, if you have a real history with a lender or have a good credit history in general, and if you have the expertise needed to negotiate with your creditors, you may be able to negotiate new loan terms by yourself. You may be able to get a lower interest rate on credit card debt by transferring existing balances to a new low-interest card or consolidate debt by taking out a personal loan or opting for a home equity loan or line of credit. The good thing about doing it yourself is that you will not have to pay for professional help, you will be able to use all your funds to pay down your debts.
But if you have severe credit problems such as massive credit card debts as well as other unsecured debts, it may not be a good idea to try to tackle them on your own. Because if you do, success is not guaranteed. And keep in mind that what created this mess in the first place is that you have not been able to manage your finances. So, you will need professional help because debt relief is something that takes a professional. It is not a do it yourself project. Not hiring a professional can end up costing you in the end.
- Choose an affordable payment
Most people seeking debt relief are looking to get away from high monthly payments they can no longer afford. The key is to get lower monthly payments that can fit your budget. The debt relief company will present you with multiple payment options for you to choose a payment to fit your budget. Keep in mind that the payment you accept must be one you can afford because you will be stuck with it for a few years. Based on the plan worked out with you creditors, that could be your payment for the next three to five years.
- Do not pay upfront fees
Upfront fees are illegal. No reputable debt relief company will charge you any fees until it has settled your debts. Make sure that the firm you hire is committed to providing service and working within the guidelines of the Federal Trade Commission (FTC). The FTC has put in place a set of rules to protect consumers from the abusive practices of some debt relief companies. One of them is the Telemarketing Sales Rule (TSR), which banned the practice of upfront payments. It is aimed at for-profit debt relief companies and makes it illegal for them to collect payment before they provide service. So, avoid doing business with companies who ask for upfront fees over the phone.
Use caution when shopping for debt relief services.
The following guidelines were put in place by the FTC to help consumers shopping for debt relief services.
Avoid any debt relief organization that does the following:
- charges any fees before it settles your debts or enters you into a Debt Management Plan (DMP) plan
- pressures you to make “voluntary contributions,” which is another name for fees
- touts a “new government program” to bail out personal credit card debt
- guarantees it can make your unsecured debt go away
- tells you to stop communicating with your creditors, but doesn’t explain the serious consequences
- tells you it can stop all debt collection calls and lawsuits
- guarantees that your unsecured debts can be paid off for pennies on the dollar
- won’t send you free information about the services it provides without requiring you to provide personal financial information, like your credit card account numbers, and balances
- tries to enroll you in a debt relief program without reviewing your financial situation with you
- offers to enroll you in a DMP without teaching you budgeting and money management skills
- demands that you make payments into a DMP before your creditors have accepted you into the program
How to hire a reputable debt relief company
A professional debt relief company with a good reputation can no doubt save you more money, give you better advice, and get you out of debt in a much less stressful manner. Start by conducting some research on debt relief companies. Read reviews by consumers published on review sites such as TopCconsumerReview.com, and ConsumerReviews.org sites that review and rates the leading debt relief service providers in the United States.
Make sure that you screen the company you select to ensure that it has the accreditation of a major industry association and a solid track record of helping consumers get out of debt. It should also have a high rating from the Better Business Bureau (BBB). The American Fair Credit Council (AFCC), is the watchdog of the debt relief industry, as well as, by far the most successful trade association. Most legitimate debt relief companies will at least be members of this organization.