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Debt Reduction Help and How it Affects You

By: Michael Millington

When unsecured debts pile up and you have no idea how to deal with them, debt reduction help can seem like a miracle. While getting help isn’t hard to do, getting the right form of debt reduction help can be. Most forms of debt relief have very specific uses in certain situations. The problem is knowing what to do in certain situations. Here we will break down different forms of debt reduction help and how you can obtain each of them.

Debt Reduction Help by Type

Credit Counseling

The simplest form of debt reduction help can be for anyone in need of some information. Credit counseling helps to clarify your debt relief options. A counselor is assigned to you to provide you with the information you need. While this form of debt reduction help doesn’t actively reduce your debt, it can put you on the right track to dealing with your debt yourself. A credit counselor can assess each individual debt you have and give you a strategy towards dealing with it. In dire cases a credit counselor can even suggest a debt management plan to deal with debt.

Credit counseling works well for those who do not need outside help to pay their debts. Many people who have a counselor can afford to make regular payments on their debts. However, in the event that some financial planning is in order, a credit counselor can be extremely helpful. The best part about seeking a credit counselor is that most of them are free or inexpensive. A list of credit counselors can be found online and credit counseling can be completed online or in person.

Debt Consolidation

Debt consolidation is a form of debt reduction help that can organize your debts to be handled personally, This debt relief method allows you to take out loan to help pay off multiple debts at once. Afterwards, only the loan would remain as debt. This eliminates the need to jump from obligation to obligation while trying to avoid bank fees, late fees and higher interest rates. Most people tend to take out a bank loan in order to consolidate their debt, but some people look towards credit cards as well. In the event you have multiple credit cards in debt, utilizing a balance transfer can work in the same way.

Consolidating your debt can be helpful for people with all kinds of debt. Big or small, secured or unsecured, it all can be handled through debt consolidation. However, in order to qualify for a debt consolidation option (whether through loan or credit card) you would have to qualify. Having good enough credit while in debt can be a hard thing to achieve, but it is possible. If you’ve freshly fallen into debt (medical bills, emergency credit card usage, etc…) then looking to consolidate your debt right away might help you to avoid negative aspects of long term debt. The longer debt lingers, the more of an impact it has on your credit record and the less you’ll be able to do about it through debt consolidation.

Debt Settlement

Settling your debts can help take the stress of dealing with debt off of you and put it on someone else. Debt settlement can potentially lower the amount of your unsecured debt, allowing you the ability to pay less to eliminate a debt. This can be especially helpful if you can only make minimum payments each month. Coupled with monthly interest rates, minimum payments don’t always make the progress that you would want. You might end up making payments for years before making a sizeable dent in your debt. Debt settlement helps to minimize your payments, deals with creditors directly, and can get you out of debt completely in less time than other forms of debt reduction help.

The main issue with debt settlement is the uncertainty of the process. Whether through an individual or, more popularly, through a settlement company, your creditors are not required to accept a settlement plan. This can still leave you owing the entirety of your debt. Settling debts on your own can be stressful, as talking to your creditors has a tendency to be. Settling debts through a debt settlement company has a higher chance of success, but would require you to pay for services rendered. Make sure you need debt settlement before contacting a creditor.


Filing for bankruptcy can completely eliminate unsecured debts. The concept is almost as simple as credit counseling. Bankruptcy is one of the most extreme methods of debt relief as it takes care of debt so completely. It is also known as a last resort among forms of debt reduction help as it can cause a great deal of damage to your credit record. A bankruptcy can stay on your record for up to ten years. This is why many wait until they don’t have any other options in order to file bankruptcy.

Only if you have no way to make payments on your debts should you consider bankruptcy. While bankruptcy can solve a lot of problems, it also creates many issues as well. A bankruptcy on your credit record can prevent you from applying for new lines of credit. This can effectively stop you from getting new credit cards or personal loans. Purchasing a home or car can be almost impossible to do. Waiting for ten years might seem like a long time, but if you don’t have the means to pay off your debts then bankruptcy can be more of a blessing than a curse. Consult with a professional before making any final decisions.