For many Americans getting into debt can seem like either a slow crawl that cannot be stopped, or a slippery slope that comes on them suddenly and overwhelms them.
The one constant however, is the need to find debt solutions whether that be in the form of credit counseling and debt consolidation, debt settlement or as a last cause, filing for bankruptcy.
The very last thing anyone should do is file for bankruptcy for a great many reasons.
While it may seem like the easiest way out of debt it actually is a stigma that will effect you not only financially but in a great number of other ways as well.
With that in mind let us focus on debt consolidation and debt settlement as we seek concrete solutions for becoming debt-free.
Credit counseling and debt consolidation are two terms that have pretty much become synonymous.
Debt consolidation basically works as follows; If you have several different credit cards that you owe balances on and our having a difficult time paying them you can work with a debt consolidation service that will help you in two ways.
First and foremost they will negotiate with your creditors for lower interest rates.
They will then act as a clearinghouse of sorts because you will be making a single monthly lump sum payment to the debt consolidation company who will then distribute payments for you to the individual credit card companies In the agreed upon amounts.
The advantage of doing this is that the debt consolidation services have a working relationship that has already been established with the credit card issuers allowing them to effectively negotiate more favorable interest rates.
And by combining all of your credit card payments into a single monthly payment it will be more affordable and easier to manage for the consumer looking to pay down their debt.
Debt settlement services operate in a completely different way.
Debt settlement means that you are negotiating with your creditors to pay off a percentage of what you owe them while the remaining percentage will be forgiven.
So let's say for instance you owe $20,000.
With debt settlement you can negotiate to pay for example, $12,000 of that total.
The remaining $8,000 will be forgiven, or written off by the creditors.
The reason a creditor will be willing to do this is because they realize that if they do not, in many cases the consumer that owes them the money may go into default or file for bankruptcy.
In either case the creditor will get nothing.
So basically in this scenario, getting something is better than getting nothing.
These are the two most sought after debt solutions and can be done either by the consumer directly or through a company that specializes in either debt consolidation or debt settlement.
It is advisable that the consumer seeks out a reputable professional service to help them manage their debt as opposed to trying to do it on their own.
A company that specializes in debt solutions has the expertise, knowledge and experience to effectively negotiate on your behalf.
Be sure that the company you choose to work with is a reputable one by posing any questions you may have about how their service works and by thoroughly checking them out through the Better Business Bureau (BBB) and other such watchdog organizations