Debt Settlement Programs For Troubled Consumers–Are There Alternative Plans For Settling And Repaying Debts?

Many troubled consumers often turn to debt settlement programs when they may have seen problems arise which have led to a situation where they are unable to meet the entirety of debt obligations they may have in their life and, as a result, are looking to the settlement options as a way to work out agreements with their creditors which will allow them to either meet one or multiple payments that are not only affordable but will offer consumers the option to settle these debts at an amount less than the original amount they owed. Obviously, debt settlement is not the first option that consumers need to seek when they are attempting to find some form of debt relief, as there are alternative plans that may help consumers avoid settling their debt and offer them affordable repayment options.

While the opinions of financial advisors differ when it comes to debt settlement, some consumers may have the opportunity to avoid a formal debt settlement program if their situation is not too severe or they are simply in a predicament where they are only looking to settle a few debts and may have made contact with their creditors. There have been consumers who have simply talked with their creditors, like credit card lenders, explained their situation and worked out a settlement agreement in this fashion.

There have been men and women who have been very blunt about their situation and stated that they cannot pay the debt that they owe but would rather not simply default on the entire amount of their obligation, and this can lead to some form of settlement.  As an example, Mint.com reports, “Settlement can be accomplished by working directly with your bank. You do not have to hire someone to do this for you. That’s a myth. In fact, many credit card issuers won’t even work with debt settlement companies so you have no choice but to deal with them directly.”

However, credit counseling organizations can also help consumers when it comes to setting up a debt settlement program, even though there are some who feel that this should be avoided if at all possible. Again, options like credit counseling and even a debt management program are usually steps that consumers take well before turning to an official debt settlement program, but even if some form of settlement needs to be reached, consumers must make sure they are working with a reputable counseling agency or debt settlement company before proceeding with any formal agreement.

Again, formulating a household budget with the help of a credit counselor or simply by sitting down and looking at one’s income versus expenses will be greatly helpful in showing a particular consumer where they stand, but if financial troubles have arisen to the point where outside help is needed, resources like Google or the Better Business Bureau should be consulted so that consumers can find a reputable counseling organization and also do research on testimonies of past clients if debt settlement has been needed. These companies who are offering aid to struggling individuals may charge fees for their services, but these costs should be well outlined beforehand, the company should be accredited, and consumers must make sure that if they enter into a debt settlement program they receive a breakdown of how their money is being divided up to creditors or if a one time payment is offered, consumers must look over the agreement before proceeding. While, again, debt settlement can be one form of debt relief, it will usually damage a consumer’s credit score and, as a result, alternatives should be sought out beforehand and consumers who do enter into debt settlement may need to begin preparing to rebuild their credit history and score.