Over the last few years, debt relief services have promoted themselves as a lifeline to those experiencing financial hardships. These companies use a variety of methods to negotiate, settle, and in some instances, eliminate debt. But debt relief companies are not simply performing a service out of kindness. They are designed to make a profit for themselves. You may be wondering how these companies work and how effective they are in comparison to other traditional forms of debt relief. Here’s more on debt relief services, and some alternatives to help you get out from under crushing debt.
What Are Debt Relief Services?
Debt relief services, also known as debt settlement companies or debt adjusting services, are for-profit companies that offer to help debt-ridden individuals by using a number of techniques. These companies charge large fees for their services. They work by negotiating directly with creditors on your behalf in an attempt to reduce or settle your debts. Many of these companies suggest that you stop paying on your debts. They do this in order to create the leverage that they need in order to settle your debt with your creditors. What you may not know is that when you stop paying your obligations, this can lead to your creditors reporting you to the credit agencies, and also result in your creditors suing you. Additionally, late fees and penalties might be added to your overall debt.
Debt relief can be helpful to some. Many debt relief services offer debt counseling to help you better manage your finances. They offer advice on budgeting and eliminating unnecessary or redundant expenses. Some debt relief services also offer debt consolidation. Although debt consolidation can be effective, you must make sure that the consolidated amount will be less than your original unconsolidated debts.
Alternatives To Debt Relief Services
If you are looking for a fresh financial start, then bankruptcy is one option that can help you reduce or eliminate your debt. Because bankruptcy is not for everyone, it is important that you first educate yourself on the bankruptcy process and the potential consequences of filing.
You may also be able to successfully consolidate debt without the aid of a debt consolidation service. In fact, zero or low interest credit cards may provide a way to consolidate your high interest debts. These cards offer zero or low interest rates for an introductory period. Once that period is over, the interest rate may go up to as much as 20%. It is important then that you pay off your debt before the introductory period ends.
You can also look to negotiate your debt directly with your creditors. For example, unpaid medical bills may be reduced and ultimately settled if you offer your creditor a one-time lump sum payment. Because it costs creditors money to pursue unpaid bills, they may be willing to settle your debt at a reduced rate. Some creditors will also offer a payment plan to help you pay off the debt in installments.
Colorado Bankruptcy Lawyers At Your Service
If you are thinking of debt relief services, bankruptcy or other forms of debt relief, then you should consider consulting with an attorney who is abreast of bankruptcy laws. They can apprise you of your options and guide you throughout the process. Our skilled attorneys will carefully analyze your situation and help you find solutions that fit your needs. For a consultation with Consumer Law Pro, call (303) 297-7729 or contact us online.