Debt Relief or Debt Consolidation: Which Will Help?

Many of us have seen the afternoon talk shows featuring a guest claiming their program negotiates with creditors to reduce your debts.  This is not debt consolidation.  Debt consolidation is replacing several small loans with one larger one.  After debt consolidation you have the same, or more, debt than before you got the debt consolidation loan.  You just have a different way of paying it.  So what is debt relief?  Will it help you?

Okay, first, before you go any further, go to this website: optoutprescreen.com and opt-out of any future loan offers.  What does this have to do with debt consolidation or relief?  If the offers don't come, you won't be tempted to just get another card.  You've been there, done that.  Ever taken three months to pay off two outfits?  You know who you are.  Go there now!

Debt Consolidation is Not Equal to Debt Relief

What are you being offered?  Debt relief sometimes means bankruptcy and but it does not mean debt consolidation.  Yep, some companies want to sell you bankruptcy.  They tell you that it's your best way out of this situation. And some people believe them.  Hopefully, it won't be you.  Either they are following illegal practices, or what they offer will not help you.  Don't let someone claiming to help you talk you into bankruptcy.

Other debt relief is a very complicated system of debt repayment.  This can be very expensive, like over 14%, and will ruin your credit.  Be very, very careful.  If you consider a service like this, it should be the last stop before bankruptcy.  And it will look very bad on your credit rating.  Check out any services with your state's attorney general and BBB.  Debt consolidation can be addictive, but this can get you burned.

With all of this dark talk, is there something you can do?  First find a CERTIFIED credit counselor.  The government has taken some of the guess work out of this.  Look for a state-by-state list at the usdoj.gov website. This doesn't mean that they are good, just certified, so check them out.  After all, there are some licensed attorneys that you won't want representing you.

Maybe, debt consolidation is the way. But, call your creditors, too.  Most creditors want to help you find a way to pay.  After all, if you take a little longer, they get more interest. If you are not badly late, your creditor may help you by lowering your minimum payment temporarily, or changing terms.  The key here is to keep in contact.  Every contact you make reduces the possibility of the debt going to collections.  You want to keep your debt out of collections.

Finally, some debt relief plans are debt consolidation loans by another name.  This may be a good way for you to go about it, but know what you are doing and what the consequences are. Debt relief is very desirable, but very dangerous.  Look at it with skepticism until you learn otherwise.  And whatever you do, don't just stop paying your bills. That will land you in bankruptcy.

Financial Freedom with Debt Consolidation