Do you need help with your unsecured debt? Then you've probably noticed the countless ads saying that your payments can be cut in half or more by working with a debt consolidation company.
First, you should understand that what is commonly referred to as 'debt consolidation' is actually 3 different products - debt management plans, debt settlement and debt consolidation loans.
The product that will work best for you depends on a number of factors starting with the amount of debt you have as well as your ability to manage it. Each product has its own set of terms, eligibility requirements and repercussions which can affect your credit both positively and negatively.
Make sure you understand the differences between the products and choose the right product for your situation. Many companies only provide one or two debt consolidation options and will sell you their product even if it is not right for you.
Many consumers have apprehensions about using the services of a credit counseling agency and with good reason. There are companies that call themselves credit counselors but promise more than they can produce. Reputable credit counseling agencies help people get out of debt every day by being up front about their capabilities and following best practices.
As with other service-related industries, you just have to do a little research to make sure you're working with the right people. The internet is a great place to start checking out the credentials of credit counseling agencies.
There are many different reasons that can lead to a drop in income or an increase in debt, and you may be caught completely unprepared. Common causes include illness or injury, divorce, losing your job, birth of a baby or retirement.
If cutting your budget hasn't done enough to ease the burden of debt repayment then you should begin to consider your other options. For those that have already fallen behind on making payments, the longer you wait the more your debt will mount as additional expenses like late fees are added on.
For more resources on how to protect your family welfare, read:
When Your Income Drops: Plan to Pay Creditors and Promoting the Health and Well-Being of Families During Difficult Times