One of the unfortunate consequences of all the aggressive marketing of consumer credit by banks is that many consumers, lured by 0% introductory offers, have taken on more credit than they can afford. As a result, many are searching for consumer debt relief alternatives. While there are many good companies out there who can help, there are as many, if not more, less reputable entities who promise debt reduction or consumer debt relief, but then don’t deliver.
Doing it Yourself
Consumer debt relief is a hot topic, especially in the current economic climate. Tons of books and articles have been written about it, and almost anyone should be able to locate some reliable self-help information on consumer debt relief. Many experts and consumer debt reduction advocates believe that most consumers can successfully communicate directly with their creditors. If you have an accurate budget for your monthly income and expenses—even if it’s just pencil-and-paper—you have the first tool you need to enlist your creditor in your search for consumer debt relief.
Debt Settlement: Buyer, Beware!
Debt settlement is a form of consumer debt relief in which a third party—either an attorney who specializes in debt settlement or a debt settlement company—negotiates on your behalf with your creditors. You pay a fee to the firm, and they try to convince the creditor to agree to a payoff that is less than the total amount owed. Be careful of companies that advertise “guaranteed” savings of 50% or more of your debt.
No company can make such a guarantee, since creditors are under no obligation to accept their offer. However, there are reputable debt settlement companies who have successfully aided consumers in getting debt relief. One good indicator is the Better Business Bureau’s logo on the website. Click on it and carefully read all the BBB’s cautions about debt relief offers and practices.
Consumer Credit Counseling
This is the most traditional option for consumer debt relief, but some experts question its effectiveness. First of all, most consumer credit counseling providers are funded by the banks and credit card companies, and will almost invariably recommend a plan that involves 100% payback. Also, CCC plans often run for five years or more—a long time for somebody who’s trying to get out of debt as quickly as possible. Some experts suggest the failure rate is as high as 80% for consumers seeking debt relief through CCC agencies.