As credit card debt continues to climb to record levels, many people are struggling to stay out of the debt trap. While there are many ways to tackle debt, one option that could help is working with a trusted, accredited debt relief company. This type of company can offer debt consolidation, debt settlement and other services that may help you get back on track financially.
Getting trapped in debt can happen quickly or gradually, as interest rates rise and you add more and more to your outstanding balances. Whether you’re juggling multiple bills or facing a mounting number of collection calls, the stress can be overwhelming and you might feel like you’ll never escape the trap.
While you might be tempted to turn to debt relief services for help, it’s important to know that there are several types of debt relief options available and each offers a different approach. Choosing the wrong option can cause damage to your credit and your finances for years to come.
A for-profit debt relief company may charge high fees to help you pay off your debt, but that doesn’t mean they can help you break out of the debt trap. In fact, these companies often encourage you to stop paying your creditors and instead save money for a “debt settlement.” While this might seem appealing, it can be risky and you’ll likely be charged late fees and missed payment reporting that will hurt your credit score.
On the other hand, a nonprofit credit counseling agency can work with your creditors to reduce interest rates and monthly payments to a level you can afford. In most cases, you’ll deposit a single monthly amount into an account that the counselor then distributes to your creditors. This option can be a great way to avoid bankruptcy, but it can take 3-5 years of consistent payments before you can expect to reach financial freedom.
Some debt relief programs claim to be able to negotiate lump-sum settlements with your unsecured creditors to significantly reduce the amount you owe (often by 50% or more). This type of program is typically considered a form of credit negotiation, which is regulated in some states and requires licensure and openness to state supervision.
You can also try to work out your own debt-relief strategy by focusing on the following steps: Increase your income by finding ways to make extra money or by selling unwanted items. Increase your credit score by making regular payments and avoiding new debt. Become more responsible with your spending by reviewing your budget and cutting unnecessary expenses. Then, work on your plan for becoming debt-free. Be sure to consult a New Mexico debt relief company to learn more about your options and the best path forward for you.