If debt is mounting and you continually find yourself struggling every month, it
may be time to seek debt relief. An important part of selecting the best way to
eliminate your debt is to realize when it's time to ask for help. Debt
consolidation and debt settlement programs are both very popular ways to help
consumers get out of debt in a short period of time, but are they right for you?
Neither of these programs are available for people who are simply tired of
paying their bills, but they are available to those who are already late with
payments, have bills in collections or have had a sudden change in their income.
There are a number of non-profit organizations currently offering debt
management services, which include both debt consolidation and debt settlement.
Some companies may offer both, while others may specialize in one or the other.
In order to be eligible for either of these programs, you must be able to show
that there is not sufficient income to pay your bills as they currently require.
If this sounds like your situation, debt relief may be just a phone call
away.
If you are receiving calls from your creditor's collections
department, speak with them openly and honestly regarding your situation. Once
you have signed up with a debt management company specializing in either debt
consolidation or debt settlement, inform your creditor(s) of the name and
telephone number of the company. In most cases, this will stop the collection
calls while the creditor verifies the information that you provided. By
explaining the fact that you are working with a company who will be submitting a
proposal on your behalf, most creditors will accept this information as your
good faith desire to repay your debts. As the telephone begins to stop ringing,
you will gain some much needed relief from the stress associated with being
constantly reminded of your financial woes.
When a debt management
company sends your proposed new monthly payments, interest rates and/or debt
settlement offers, the creditor(s) will either accept or deny the offer. Within
weeks, you will be informed of their decision and will have the ability to call
the debt management agency to remain updated with creditor's responses. After
1-3 months of consecutive payments made through a debt relief agency, most
creditors will begin to list your account as current with credit reporting
agencies.
It is recommended that consumers check their credit report
periodically in order to maintain the accuracy of the content and to prevent
them from being a victim of identity theft. Each year, you are entitled to
receive a free copy of your credit report from each of the three credit
reporting agencies, including Equifax, TransUnion and Experian. If you enroll in
a debt consolidation or debt settlement program, it's a good idea to check your
credit report prior to enrollment and then again after six months. When you
compare the two timeframes, you will likely see a great improvement as creditors
begin to receive their payments and update your credit reports accordingly. If
any of the information is inaccurate, you can file a dispute with the credit
reporting agency and get the corrected version updated in a short amount of
time.
Dealing with debt is not an easy task. In fact, it can be a very
exhausting experience. Once you have faced your finances and made an important
step toward eliminating your debt, your life will begin to improve right along
with your credit score.
