How debt relief companies really work?
Usually, people believe in spending less than they earn monthly to save money and paying down debts and making sound investments. But, most importantly we believe in investing ourselves. Most of the people who want to understand the working of the debt relief companies, these people are in the pretty tough financial situation. They are usually struggling with making both ends meet. Also, they are struggling in making the minimum payments on their credit cards accounts.
What Debt Relief Companies Offer You?
The debt relief companies are just like the rescuing boats that you have been waiting for. A debt relief company usually offers you two options.
- The first option, which is usually the best option, is that the debt relief company gives you a consolidation loan. You take that loan and pay off all your high-interest credit cards. This makes sense as instead of paying highinterest rates to the credit card companies, you can pay very low-interest rates to debt relief companies. You will have much lower monthly payments when you consolidate your debt.
- Some debt relief companies have you stop making payments on all your credit card accounts entirely. So, if you are working very hard to pay all your bills on time and you choose this cond option, then all your hard work will go out the window. Because being 90 days past on some different credit card accounts will make a pretty big debt amount on your credit report. After 90 days the debt relief company will approach your credit card company and settle it for you. So generally, you stop making payments on credit card accounts and instead make payments to your debt relief company who then inputs this money into an account just for you.
Now, once the debt relief company believes that enough money is being accumulated in your account to settle the debt with the creditors, the debt relief company then negotiates your debt on your behalf. The debt relief company approaches the creditors. All the details of the negotiations and the settlements that are made between them are now disclosed to you, and you just get the final number.
What Can You Do For Yourself?
So, you are allowing the debt relief companies to hold your money for you and then negotiate your debt for you. This is not very hard, and it is something that you can do for yourself. Therefore, while in the difficult financial situation, you want to do as much work as you can to save money.
All you need to go online, do some research, write things down and access the people in your bank which deal with people who are facing financial hardships. You can tell them what you are going through, such as, you are a single parent, you just got divorced, going through illness,etc. You have to figure out where the traps lie and where there is aconflict of interests are.
The key is to “Spend the money less than you earn, save money, pay down your debts, make sound investments and most importantly invest in your stuff.