One of the most frequent issues that readers usually want more information about is debt relief programs that they have heard about on the radio on their way home from work. “There are people who claim to have eliminated 90% of their debt. Can that be for real? What’s the catch?” So, looking into a few of these debt relief programs, one will notice that most of them have a few big traits in common.
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Their Claims Are True but Carefully Worded
Usually, the claims only look at a narrow dimension of a person’s financial state: how does their debt level on one date compared to their debt level on another date? In that narrow sense, debt relief programs can be “successful,” but that narrow window leaves out a lot of factors.
Some of These Debt Relief Programs Wreak Havoc on Your Credit Report and Credit Score
Depending on the exact program, they will play hardball with your creditors. And in fact, playing hardball will sometimes succeed in gaining you a strong reduction in your debt level. However, this will often also include a final negative note on your credit report for years to come indicating that you had to negotiate your debt. This has a hidden cost, of course – higher insurance rates and higher interest rates on any debts you might incur (like a car loan).
Some Debt Relief Programs Charge a Hefty Fee for a Simple Debt Consolidation
One program I’m familiar with consolidated one person’s debt into a convenient low monthly payment. However, this new consolidated debt had a higher interest rate than almost all of the other debts. And combined with that lower payment, this meant that the person involved would be paying on that debt for many years to come.
Most of the tactics these programs rely on are common knowledge. Setting up a debt repayment plan is actually pretty simple, as is negotiating with your creditors. People can do this on their own without paying for the services.
What These Plans Offer is Guidance for People Who Feel Lost and Don’t Step Up to Empower Themselves
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Many people who are responsive to these ads are obviously in a bad situation. However, the real kicker is that they feel very lost in that situation. They don’t know where to turn for help – and here’s a service that’s pledging to solve that very problem. When a problem is overwhelming you, a safety rope sounds incredible, no matter where it comes from.
Debt relief programs do put a plan in place for you, albeit an expensive one both in terms of the direct cost of paying for the service and the indirect costs such as the effect their plan may have on your credit report.
Try the Well-Known Tactics by Yourself First and Use Great Caution If You’re Considering Using a Debt Relief Program
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You are always better off trying to solve your debt problems on your own first. Try to assemble your own debt repayment plan. For starters, creating that plan (going through a few steps to improve your interest rates) can make the impossible seem quite solvable. If you still need help, ask for help from people you personally know first. And not in terms of loaning you money; just ask for help in terms of helping you come up with a plan that works for you.
If you’re still having troubles, then consider some professional help with caution. Seek a non-profit credit counseling service first as they’re not as motivated by the need to profit from your situation.
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