Some of the most common New Year’s Resolutions every year are people resolving to get out of debt and save money and debt reduction companies know this. People looking for a quick fix to solve their debt problems are often targeted and end up being swindled by a con artist company. Debt does not go away overnight, but you can eliminate your debt with patience, sacrifice and hard work.
What is Debt Relief?
You may have heard companies offer to get you out of debt fast and guaranteed, but you may not know what that offer really means. Most companies work as a negotiator between you and your creditors to try to settle on a reduced amount owed.
Can Debt Relief Help You?
If you are overwhelmed by a seemingly insurmountable mountain of debt, it may be helpful to consider a debt relief program offered by one of these companies. However, despite their claims of getting you out of debt fast and easily, debt settlement does not always work, is not always easy and can negatively impact your credit score.
How Do Debt Relief Companies Work?
Their premise is they will act as a negotiator on your behalf to settle for a significantly reduced amount. While this sounds good in theory, some companies may not be transparent about all the charges and fees they will apply. Companies often take their payment up front rather than splitting it with your debt payments and it could take months before you see any of your debt reduced or eliminated.
Buyer Beware
The debt reduction and debt management industry is ripe with con artists and scams. You have a better chance at getting scammed by one of these companies than you do finding a good one. You can settle your debt on your own by talking to an authorized supervisor in charge of your unsecured debt. You do not have to hire a third-party member in order for this to happen. You should also be aware that it can hurt your credit score by showing your account is settled, rather than paid in full.
How to Reduce Your Debt
Start by prioritizing your debt into three categories. The first category is for small debt that you can pay off relatively quickly, the second is for moderate debt that you can pay off within a year’s time and the third is for any debt that will take longer than one year to pay. As you pay off your smaller debts, reallocate those funds to pay above the minimum monthly payment on your moderate and large debts. It may take working longer hours, or seeking help from a debt counselor, but you can eliminate debt on your own.
You didn’t get deep in debt overnight and you are not going to get out overnight either. Debt reduction takes hard work and sacrifice, not quick fixes that leave you worse off than you were before. Before entering any debt reduction or relief program, know what you are signing up for and avoid ending up in an even worse financial situation.
Author Bio-
This is a guest post written by Suzan Bekiroglu. Ms. Bekiroglu is a published author, freelance writer and editorial and SEO consultant. After receiving a Bachelor of Arts degree from the University of South Florida, she faced the obstacle of paying over $24,000 in student loan debt. Ever since, she has sought to educate others on debt. She also writes about general personal finance and money saving tips.
