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Choosing The Right Type Of Debt Relief

19 December 2012 2 Comments

Debt can be one of the scariest and hardest financial matters to handle. There are numerous debt relief companies who can help you to get your debt under control. However, with so many options, it can be difficult to make a selection. The following guide will help you determine which debt relief option is right for your unique situation.


Some debt relief organizations will actually teach you how to make a budget. You will find room in your budget to allocate a certain amount of money toward debt reduction. Using this model, you will make the largest payments to the debts with the highest interest rates first. Once those bills have been paid in full, you will roll those payments to the debt with the second highest interest rate, and you will continue doing this until all of your debts have been resolved. This plan is typically the best for people who have their debt under control and just need a little guidance to get out of debt.

Consumer Credit Counseling

Under this model, you will pay a consumer credit counseling company a small monthly fee to manage your debts for you. Representatives from these non-profit organizations will collect your payments each month and mail them to the right creditor. They will also negotiate with your creditors to secure lower interest rates for you.

Debt Settlement

If you really feel like you cannot pay your debts in full, you may wish to turn to a debt settlement company. When you use this form of debt relief, you will send the debt settlement company a payment each month. They will put that money into a savings account for you. In the meantime, your creditors will be waiting for payment. As they wait, they will start to get worried, and ultimately, your creditors will offer you a settlement. A settlement is when you pay your bill for less than you owe. For example, if you owe a creditor $2,000, they may accept $1,000 as a settlement. Your debt settlement company will make that large payment using the funds from your savings account.

Debt Consolidation

This is where you take out a loan with a lower interest rate to pay off your current debts. This option is easiest for people who have good credit scores or people who have a co-signer who is willing to help them get a consolidation loan.


Bankruptcy is the last form of debt relief. It is best used by people who really think they have no other chance of getting out of debt. There are a few different types of bankruptcy, and your lawyer can advise you about which one is best for you.

There are several forms of debt relief. Before selecting one, you should assess your personal situation and investigate how each form of debt relief will impact your credit score in the long run.

This guest post was provided by DebtSuccess.com, the debt management experts specializing in debt consolidation, debt relief, credit repair, tax debt, debt settlement and more.


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