Debt Help Programs    

Making the decision to look into debt help programs is difficult. There are a lot of pressures and promises that can lead you to make a bad decision. Before you go into a debt help program, make sure you know exactly what you’re getting yourself into. Here are a few tips that can help you when you're checking out your options:

1. Try to Work With Your Lender First

When you fall on hard times, going to your lender might be your best source for debt help. You may think that you should hide your need for debt help from your lenders – nothing could be further from the truth. They would rather work with you to get things solved. It is expensive for them to take legal action against you.

A mortgage loan is a great example. Lenders have a variety of ways to offer debt help when borrowers run into cash crunches. They offer debt help programs – sometimes referred to as "loan modification" programs – to get you through hard times. They may allow you to skip payments temporarily, make smaller payments, or restructure your loan altogether (by extending the term, for example).

Mortgage lenders and credit card companies alike might offer debt help if you are proactive. Call them before you get too far behind – they’re more likely to work with people who notify them in advance and are not too deep in the hole. Don’t wait until it’s too late.

2. Look out for Debt Help Scammers

The world of debt help is full of all kinds of characters. Some of them genuinely want to help you. Others offer “debt help” services that do anything but help you. These organizations might charge an upfront fee before offering any real debt help. Don’t be fooled by claims that you’re dealing with a nonprofit organization. The Internal Revenue Service (IRS) has been auditing so-called nonprofit debt help organizations and revoking their nonprofit status. In 2006 alone, approximately half of those debt help companies audited failed the test.

Some debt help shops are nothing short of criminal. They specialize in taking advantage of uneducated consumers by getting what little money is available in their budget. They might offer debt consolidation programs in the form of home equity loans. However, they fail to disclose fees and risks – and they might not mention that you’re putting your home on the line.

3. Debt Help vs Credit Help

You should also be wary of debt help programs that promise to eliminate your debts. While these may help you today, your credit score may suffer for years to come. Bankruptcy, settlements, and some payment plans can all negatively affect your credit. Again, your first step should be to contact your lenders and see if they can work something out – without it showing up on your credit reports.

If your lender is not willing to work something out, however, taking advantage of one of these options might be a good idea. Just make sure that you do your research before signing up with a debt solutions company - this helps to prevent them from taking advantage of you.

4. Do-it-Yourself Debt Help

You are the person that can help yourself the most. You’ve it is your financial health on the line, so you’re more motivated than anybody. Likewise, there’s no doubt that you will look out for your own best interests. Before spending time and energy looking for a debt help service, see if you can make a dent in your debt on your own.

Many debt help services offer to do things that you can do yourself. You can call your creditors and negotiate with them. By taking an active role, you’ll know how the system works and what you need to do to get out of debt.

The most important piece of do-it-yourself debt help is managing your budget. If you can find ways to cut costs or increase your income, you’ll have your problems solved. Track your spending using budget worksheets, such as those in Microsoft Excel. You might also try budgeting software such as Quicken. If you really track your budget, it can only help.


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