by Ruth Georgia

Created on: April 08, 2008   Last Updated: December 22, 2008

What's Really Happening with All of the Debt Relief Companies?

Do you remember a few years ago when you watched TV and you never saw an advertisement for a debt management company? I don't remember ever seeing one. It is a testament to how bad the debt problem has gotten in America, you can't turn on the TV without seeing someone selling a program to help us out of debt. You can see on other articles that I have given some advice to getting out of debt but it is a long process. I have found that only way to truly get out of debt is to follow the rules and not take out anymore debt. This was particularly hard for me when I recently totaled my car. I had to search a long time to find something reliable for what the insurance company gave me. But it is worth the pain in the long run. Ask yourself, do I make enough money to make my minimum payments, if you do then you can start the long slow road to being debt free. the first step you should consider if you can't make the minimum payments is to try and make more money. Unpopular as it may seem it is better to pay your debts. When you have tried every way to make money and pay your debts and you have failed then you have a couple of options.

The first one that we will discuss is Debt Management Plans (DMP). A DMP can either be negotiated between you and your creditor or between your creditor and a reputable Credit Counseling Agency. I would advise attempting to do it yourself as most of the CCS are rip offs. If you don't believe me, go the US Department of Consumer Affairs and see what they have to say about the industry. Reading about the law suits for these companies can be fun as well. In a DMP you pay back everything that you owe, usually with a lower interest rate and over a specified time period. A couple of warnings about this route, the payments in a DMP may be more than you are currently paying and you may have to agree not to open any new credit accounts while you are in the program. But hey if you are getting a great interest rate it may be worth it. I have heard of people getting interest rates as low as 3%. Another thing worth mentioning, once you have started paying the debt down you will notice that your payment doesn't go down. Sorry it won't until you have paid the balance off. But it really is for the best.

The next method is debt settlement. All of the advertisements that talk about paying your debt off for pennies on the dollar are debt settlement plans. How do they work you ask? Here we go. You

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