Seeking professional help

Sometimes, there are situations beyond our own control that require help. There are numerous debt relief agencies out in the market, each designed to cater to a specific need in reference to financial hardship. Ultimately, the best way for you to eliminate your credit card debt will depend on your specific situation.

• In credit counseling, an individual may avail for the services of certified counselors who have been specifically trained to assess a debtor's financial situation. The counselors' main job is to educate their customers on budgeting and debt management. They also offer free trainings and workshops on handling one's finances.

• Debt consolidation functions by combining all of an individual's debts together and paying them off as one loan. In this process, a debt consolidation agency may be able to reduce interest rates and stop over limit charges and late fees from accumulating. A certain degree of negotiating with creditors is required, as debt consolidators will be submitting a suggested payment arrangement to the creditor, illustrating their proposed terms of payment. Debt consolidation agencies usually guarantee that all their customers' debts will be paid off in three to six years.

• Applying for a debt consolidation loan is also another way to take care of bills. It entails getting a certain amount of money designed to pay off all an individual's available dues. A person can either apply for a secured loan, such as a home equity loan, where their current home and property is used as collateral. They can also acquire an unsecured loan to take care of their debts. A secured loan generally has a lower interest rate than the unsecured loan does.

• Debt reduction is a debt relief procedure that allows an individual to pay for less that what is actually due. It is also known as debt negotiation, debt arbitration, or debt settlement. In the debt reduction process, the amount that is originally owed on an unsecured debt, such as a credit card bill, medical expenses, or a personal loan, is reduced to a certain percentage. Also known as debt negotiation and debt settlement, debt reduction companies out in the market also promise that their customers can receive up to 50-70% of debt relief. They also guarantee that the debt will be paid off in the fastest time possible—as little as 18-36 months.


Before seeking help

If your current financial situation is unbearable and you opt to seek outside help, make sure that the debt relief company that you would wish to work with is accredited by your state's Attorney General, the Better Business Bureau (you can log on to their website at http://www.bbb.org), and the Federal Trade Commission (http://www.ftc.gov). Check to see if these organizations have received complaints or if they are even authorized to work in your state. For one, not all states authorize their residents to enroll in debt settlement; these states are Colorado, Delaware, New Jersey, West Virginia, Maine, Rhode Island, Georgia, Virginia, Kentucky, North Carolina, South Carolina, Utah, Ohio, Kansas, Mississippi, Idaho, and New Mexico.

Doing research on these debt relief companies also prevents an individual from fraudulent activity. There have been countless stories of debtors who have had unfortunate experiences with debt elimination and debt reduction companies promising quick, “pain-free,” and “guaranteed” ways of eradicating debt. Sadly, the price that they paid—in the financial, emotional, and mental sense—was very high. These victims have had to pay thousands of dollars for “scams” that brought them more harm than good. We cannot emphasize enough the importance of research in this arena.

If you have also had family members or friends who have gone through the same struggles and experiences you are going through right now and have consulted debt relief agencies, you may also ask for tips and questions to ask the organizations. Their recommendations are crucial and may save you a lot of heartache and money in the long run.

More resources to help you get out of debt

Eliminating credit card debt on your own

Orman versus Dave Ramsey for getting out of debt