Finance & Loans

When to contact a debt-relief company

Often times we seek help from a debt-relief company when we are unable to pay what we owe and do not desire to file for bankruptcy. Before you decide to contact a debt-relief company, do your homework first.

• Clearly understand the difference between debt settlement and debt consolidation. In a debt settlement you will negotiate and pay less than the full amount you owe. In a debt consolidation you combine all your consumer loan balances such as credit card debt and obtain a new loan at a reduced interest rate to pay off all existing debt. In either case, you may surrender your credit cards and other revolving lines of credit in the expectation of becoming debt free.
• Write down all your finances. This should include your savings, balances on your checking accounts and other funds available to you. Additionally, write down all your debt including credit cards, store credit cards and other open lines of credit.
• See which ones you can pay off before you make a decision to consolidate or settle.
• Call creditors and see what relief you can obtain from them.

When all aspects of your debt are considered, it is time to call a debt-relief company.