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Who can Help You with Debt?

22 August 2013

You may know that when you’re deep in debt, there are people and organizations that can help you. You may have seen their commercials on TV, or scanned them online or in the paper. Bankers, debt settlement companies, and even mortgage brokers can help you settle your debt, but how do you know which one to choose? Making a mistake in your choice can cause you to come to a standstill with your debt, and not realize the goal you’re striving for. Here are some of the options you have, as well as some pros and cons that go along with them.

Your bank should be the first place you go to when looking for a debt solution. They may be able to offer you a line of credit, automatic withdrawals to savings accounts, and other products that can help you get out of debt faster. Banks will only be able to help if you have good credit, and if you’re currently in a good financial situation (such as holding a job for a long time.) With a bank your credit will remain in good standing, and they may even be able to do things for you such as lower interest rates and monthly expenses. However, you do need to have that good credit to begin with, and you’ll still have your full debt load.

If most of the debt you hold is “bad debt,” such as lots of consumer debt or personal loans, a debt settlement company may be able to help you. These services will call your creditors and negotiate with them to reduce your monthly bills and interest payments, thereby significantly lowering your total debt load. You don’t need good credit to seek the services of a debt settlement company, and in fact you shouldn’t have it. This is because if you have good credit and “good debt,” such as a mortgage, using a debt settlement company will only harm that credit further. However if you do have bad credit and use a debt settlement company, your credit will begin to improve immediately. When using this option, you also need to have significant funds already in place so you can make lump sum payments right away and get your debt load lowered.

Mortgage brokers and real estate agents are other venues that can also help you lower your debt, although they’re not typically the first that people think of. A mortgage broker can provide you with a line of credit or home equity loan, as long as you meet certain qualifications and have equity in your home that you can borrow against. A real estate agent can help you sell your large home and downsize to a smaller one, thereby giving you more money to pay down your debt.

When you’re dealing with debt, these are the best resources you have at your disposal to help you either lower your debt, or eliminate it completely. And at times, improve your credit while doing so. Tomorrow we’ll look at two other resources that can help you deal with your debt – bankruptcy trustees and credit counselling organizations. While these aren’t the best options, they can be of great help to those in dire financial situations.

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