Carrying debt can be stressful, especially if you hold too much and don't have the income to support it. Common debt relief strategies, such as credit counseling, debt c🗹onso𒅌lidation, and debt settlement, can help alleviate the burden.

If you're struggling right now, we recommend starting with credit counseling to speak with a trained professional. But there are several options available. Keep reading to learn how to use a variety of strategies to find some relief from your debt.

What Is Debt Relief?

Debt relief can describe many different strategies to help consumers deal with their debts. It can refer to credit cards, personal loans, auto loans, student loans, and even mortgages. People often seek debt relief when they can't manage their debt load.

Consider some of these common debt relief strategies; these are generally applicable for unsecured debt, rather than secured debt:

• Credit counseling: 澳洲幸运5官方开奖结果体彩网:Credit counseling refers to working with a trained financial counselor who can educate you on how to manage your debt. Your counselor may negotatiate a 澳洲幸运5官方开奖结果体彩网:debt management plan with your creditors to help you pay down your debt at a lower interest rate.
• Debt payoff apps: There are mobile and desktop apps designed to help you budget your money and pay off your debts. Link your accounts and commit to using a payoff strategy, such as the 澳洲幸运5官方开奖结果体彩网:avalanche or snowball tactic, to reach your goals.
• Debt consolidation/refinance: 澳洲幸运5官方开奖结果体彩网:Debt consolidation involves using a personal loan or 澳洲幸运5官方开奖结果体彩网:balance transfer credit card to pay off several existing debts. Ideally, you end up with a single, lower monthly payment with a lower interest rate.
  
• Debt settlement: You can negotiate debt settlement with your creditors yourself or work with a 澳洲幸运5官方开奖结果体彩网:debt settlement company. Instead of paying your debt as normal, you set money aside and then pay off the entire debt for a lower lump-sum payment. This is a risky strategy and may be used by people who don't want to file for bankruptcy, but bankruptcy can actually be preferable.
• Bankruptcy: Declaring 澳洲幸运5官方开奖结果体彩网:bankruptcy is an appeal for full or partial debt forgiveness. Depending on the results, it may give you a fresh start.
  

Credit Counseling Companies

Credit counseling is a good first stop for anyone struggling with debt. You can speak with a certified credit counselor, who will help you figur𓂃e out your financial situation and develop effective ways to manage your debt now and going forward.

This can include devising a monthly budget and developing a debt management plan. Your credit counselor can help you 澳洲幸运5官方开奖结果体彩网:obtain and read your credit reportꦉs🌸 and give you the educat♔ional tools to get your financial life back on track.

You can find a credit counselor through your state's consumer protection or attorney general's office. There also are lists available through the , the , and the . Or, check our picks for the 澳洲幸运ౠ5官方开奖结♏果体彩网:best credit counseling services available.

Debt Payoff Apps

A debt payoff app is a mobile or desktop app that you download onto your smartphone or computer, or use on a website. They often work by linking your financial accounts and helping you create a repayment plan to get you out of debt, although some apps require you to input data manually. The app may suggest that you use the debt avalanche (where you pay off high-interest debt first) or 澳洲幸运5官方开奖结果体彩网:debt snowball (where you tackle low balances first) strategy.

These apps don't reduce the amount of money you owe. They're designed to keep you on track and monitor your progress, which can help you save money by being more financially self-aware.

Debt Consolidation/ꦿRefinance With Personal Loans

A 澳洲幸运5官方开奖结果体彩网:debt consolidation loan is a new loan you use to pay off your existing debts. If you need quick debt relief, it only makes sense to take out a consolidation loan if you'll wind up with a lower overall monthly payment. Depending on your credit, you may be able to get a loan at a lower rate than your existing debts—that's why people tend to use personal loans with lower rates to pay off high-interest credit card debt.

You can 澳洲幸运5官方开奖结果体彩网:get debt consolidation loans through banks, credit unions, and online lenders. You'll need to apply and be approved by the lender, which means meeting certain requirements that may include a certain credit score, income threshold, and 澳洲幸运5官方开奖结果体彩网:debt-to-income (DTI) ratio.

Debt Consolidation/Refinance With Credit Cards

You may qualify for a 澳洲幸运5官方开奖结果体彩网:balance transfer credit card t🦩o consolidate and refinance your debt. If you're approved, you can transfer the balance of your outstanding debts onto this ne✅w card.

Many card issuers give new cardholders 澳洲幸运5官方开奖结果体彩网:introductory or teaser rates of 0% for a certain period, usually from 12 to 21 months. This means you won't have to pay interest during that time, although you may have to pay a balance transfer fee, which is a percentage of the balance. You will have to make minimum monthly payments, however, and if you miss a payment you can lose the 0% APR and get stuck with a very high penalty APR.

You've probably received offers in the mail for new cards, which is a great place to start. Many lenders allow you to see if you 澳洲幸运5官方开奖结果体彩网:pre-qualify for a card without impacting your credit.

If you take a balance transfer offer, be sure to make every monthly payment on time. When the introductory rate ends, your balance will convert to the normal APR, which is likely to be quite high. It's a good idea to divide your card balance by the number of months you have to pay it down, and make that your monthly payment (unless that would be smaller than your required minimum monthly payment—in that case, just make the required minimum payment).

Debt Settlement

In debt setltement, the goal is to pay off your debt for less than you owe, typically with a single lump-sum payment. Debt settlement can be done on your own or through a debt settlement company. 澳洲幸运5官方开奖结果体彩网:Debt settlement companies can't do anything you can't do yourself, but like a tax professional, they may be worth hiring if you wan🔴t help dealing with your debt and creditors.

In a typical debt settlement process, you cease making regular payments to your creditors. Instead, that money is put into a savings account, sometimes known as a "war chest." This money is used to negotiate w🐓ith your creditors. By no longer making regular payments and instead offering a lump sum, your creditors are placed in the position of either getting🌃 something or potentially nothing.

But debt settlement is very risky. If you fail to pay back your debts, you're violating the agreement you originally signed, and in some cases creditors take such borrowers to court. When you fail to pay, your debts will likely be sold to 澳洲幸运5官方开奖结果体彩网:collection agencies.

There's no guarantee that debt settlement will work—creditors aren't obligated to accept debt settlements. When you stop paying your debts, your credit score will take a large hit. There will be further credit damage if you actually achieve a debt settlement. And if you work with a debt settlement company, you'll be charged a fee—which can be very large—based on the percentage of debt you had.

Despite the risks, if you're facing overwhelming debt this strategy may be suitable if you don't qualify or don't want to file for bankruptcy.

Bankruptcy

Bankruptcy is generally seen as a last resort, although it can be preferable to debt settlement. Each one severely damages your credit, but bankruptcy may cost less overall whil🌳e taking less time, and it may be more of a sure thing.

Bankruptcy is considered one of the quickest ways to come out of debt. You don't come out unscathed—your credit score will take a nosedive and the bankruptcy stays on your credit reports for up to 10 years. The negative e♔ffects diminish over time before that, however, and your credit score ma💦y start to rebound more quickly than you expect.

To file for♊ bankruptcy, you must meet with a bankruptcy lawyer and fulfill several requirements. These includ🌺e providing relevant financial information and filling out forms. You may be required to undergo credit counseling and pay some relatively small fees before your lawyer can file the paperwork.

Keep in mind that you may qualify for free legal services through the American Bar Association or the Legal Services Corporation if paying for an attorney is too burdensome.

How to Avoid Debt Relief Scams

Debt relief (and credit repair) scams are aimed at people with a significant amount of debt, notably high credit card balances. They make false guarantees to negotiate, lower, or settle a consumer's debt with their creditors if they pay an upfront fee.

It's difficult to determine how many people are affected by these schemes because many people don't report them. But you can avoid being duped by one of these scams if you're conscious of the following warning signs:

• Unsolicited requests: Be suspicious of any emails, phone calls, or text messages you may receive for debt relief. Credit report information is not private, so legitimate debt relief companies may reach out if you have debts listed on your credit reports. But don't respond directly and most importantly, don't click on any links you're sent. Instead, visit company websites or 澳洲幸运5官方开奖结果体彩网:check trusted recommendations to inquire into their services.
• Demands for upfront payments: Be wary of promises to eliminate your debt in exchange for a large upfront fee. Legitimate debt settlement services negotiate your debt first and generally take a percentage (15% to 25%) of your enrolled debt after a negotiation is successful. You will likely have to pay a fee to open a savings account at the beginning of the program, however.
  
• Watch out for guaranteed results and government backing: Some scammers use terms like "guaranteed results" or "new government program" to legitimize their scams and entice consumers. But debt relief companies can't guarantee results because there are no legal obligations for creditors to accept settlement, and 澳𒅌洲幸运5官方开奖结果体彩网:the governmeಌnt doesn't provide debt relief.
  

Negotiating with creditors can be a long process, which is why legitimate debt relief companies don't promise extra-fast results and don't make guarantees. Look for companies that are accredited and recommended. Look for customer reviews and ratings if you're unsure.

Frequently Asked Questions (FAQs)

The Bottom Line

If you're saddled with debt and can't find a way out, remember that there are organizations that may be able to provide some measure of help. Start with credit counseling to get organized and gain a clear picture of your financial situation. Their expertise may give you clarity and options you didn't think could work for you.

Debt payoff apps are another relatively easy way to get started that won't impact your credit score. If you've tried everything else, a debt settlement company or bankruptcy lawyer may be the right strategy.