Explore Debt Reduction Options

Answer 1

Consumers with too much debt face the daily strain of phone calls from collectors trying to get them to pay. Rather than jump into bankruptcy proceedings, debtors should rather investigate debt reduction options that can actually make their balances more manageable without destroying their credit rating.

The first step in pursuing a debt reduction strategy is to learn about different companies that offer debt reduction services. Debtors need to find a company that has good references, a transparent mission and good reviews. Some debt reduction services are scams and others are designed to market other services; consumers need to find one that is concerned with finding ways to help them recover from their debt without making their problem worse.

Free consultations are usually available that allow a company to find out if it can help a prospective customer and if that prospect wants to consider using the services of a company. During the initial consultation, the debt reduction service provider will learn the details of a debtor's financial situation including how much he or see owes and how much he or she can afford to pay.

Qualifying for a debt reduction program is not an automatic process. Creditors will usually decline the opportunity to reduce the balance on an account if they think a debtor is trying to exploit the system or commit fraud. Therefore, new accounts on which few or no payments were made will usually not be included in a debt reduction package.

Those who are accepted into a debt reduction program are usually told to stop sending payments to creditors and collection agencies while negotiations are underway. After negotiating with each creditor to reduce the balance of each account, the service will then roll all the reduced balances into a single account and set up monthly payments. The fees debt reduction services charge are usually rolled into the final balance, so debtors only have one payment to make every month.