Before you ask how they work or if they truly work, it’s important to understand  how a debt help service company operates. In a nutshell, debt help or debt relief services offer you assistance to get out of debt through various means, which include, but are not limited to, credit counseling, debt consolidation, and debt negotiation.

If you’re struggling to pay monthly dues for your loans and other debts, and your stress is mounting from creditors and collectors persistently calling to follow up on payments, then debt relief services might be a valid option for you. It’s just a matter of finding the kind of service you need based on the kind of debts you have, the minimum amount you can commit to pay every month, and the amount of time you are willing to commit to pay the debts.

Going back to the question of whether these services really work, the answer is “yes” but only if you do your part. This means coming to grips with the fact that you have a financial problem that needs to be resolved with the right kind of information, discipline and sacrifice.

The first step in making debt relief services work for you is choosing the right kind of service for your situation. Here’s a list of the debt relief services you can readily find and what it will take to succeed on a partnership with them:

Credit Counseling

This service can work for people who are trying to lower their interest rates while staying away from new liabilities. Credit counseling involves helping people in debt face the reality of their situation and lay down the facts on how to start paying off debt in a sustainable way.

Credit counseling agencies help their clients repay debts on a fixed schedule. These firms set up what’s called a debt management plan or DMP, which helps reduce monthly payment obligations through negotiation and managed disbursement.

With a DMP, the customer deposits money to the credit counseling agency every month, who then makes the payment to the creditor/s. The process will continue until the debt has been paid back 100 percent, plus interest. The monthly payments are made at a reduced interest rate, which has been agreed upon by the debt relief agency and credit card company through pre-arranged agreements.

Once you’re on track with your DMP, the collectors will stop with their regular calls for follow ups. However, depending on the total amount of your debt, the process of repayment can take anywhere from two to five years.

Debt Settlement

This can work if you’re struggling to make the minimum payments on your debts but you’re willing to commit to seeing the process through a specified amount of time.

Debt settlement, or debt negotiation, is when companies negotiate (or settle) directly with creditors to resolve your unsecured debts through an escrow account set up specifically to settle the debt you have officially declared cannot  be paid in full based on the initial terms.

Once you enter the negotiation program, you deposit savings into  a dedicated  savings account. Only when the debt negotiators finalize the settlement terms do you pay your creditor using the funds in the savings account.

Through debt settlement, your balances could be reduced by up to half or more of what was owed, though this does not consider the fees of the debt negotiation company. Often, the required monthly deposits are lower than standard minimum debt payments.

Take note that for any forgiven debt, you might have to pay income tax based on the amount that you didn’t have to pay.

The question of whether debt help services work or not largely depends on your working relationship with the agency you choose and how strictly you follow the plans you’ve set up together. Self-discipline is an important factor, as well as your commitment to seeing the process through.

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