(ARA) – If
you find yourself in a financial hole you can’t get out of, it’s
important to know you have options. Being in debt can cause people
to continue to make payments that they can’t afford or can barely
afford without much hope of ever eliminating the debt. If you find
yourself in this position, there are a few routes you can pursue to
free yourself from overwhelming debt.

First, getting out of debt on your own should always be your
first choice, if you can do it. The quickest way to save money and
keep your credit intact is to pay off your balances as quickly as
you are able.

If you don’t think that option is open to you, it might be time
to seek outside help. The Federal Trade Commission recommends
looking at the following options and finding what might work for
you. When you examine each of these possibilities, make sure the
organization you are working with is legitimate. Always beware of
hidden costs and make sure you know exactly what you will receive
before you pay for these services.

* Credit counseling: If you don’t think you can get your debt
under control by yourself, credit counselors can help you develop a
plan to get out of debt.

* Debt management plan: Often offered through a credit
counseling service, this allows the participant to make monthly
deposits to the service, which in turn will pay your bills as
worked out with your creditors. You will be required to make your
monthly payments on time and you may be barred from applying for
additional credit while on the plan.

* Bankruptcy: This is usually considered the last resort, but it
can allow you to have some of your debts forgiven completely. You
may also be required to put your car, house or other assets toward
repaying your debt. Bankruptcy stays on your credit report for 10
years and can make it difficult to secure any type of credit during
that time.

* Debt settlement programs: Often considered an alternative to
bankruptcy, debt settlement, or debt negotiation programs, allow
those with unsecured debt (debt not tied to an asset, like credit
card debt or medical bills) to pay less than what they owe through
negotiating with creditors.

“The goal of a debt negotiator is to obtain a debt settlement
for you on the current debt amount you owe your creditor. For
example you may owe one particular creditor $10,000, so the goal of
the negotiator would be to have you end up paying back say $5,000,”
says Steven Veator, senior program adviser of Core Financial
Services, a Massachusetts-based debt settlement agency.

Recently, much attention has been brought to fly-by-night debt
settlement agencies that often only cause participants to go into
more debt. If you plan on enrolling in a debt settlement program,
the United States Organizations for Bankruptcy Alternatives
(USOBA), a professional organization for the debt settlement
industry, recommends taking the following things into account
before enrolling in a program:

* Know in advance that your credit score will take a hit. Any
debt settlement agency promising otherwise is probably not telling
the truth.

* Programs will often take two to three years to complete. If
you can’t make the payments necessary to complete the program,
don’t enroll because you will still be responsible for your debts
in addition to any program fees.

* Beware of hidden fees. Make sure all fees you will have to pay
during the program are agreed upon before enrolling in the program,
along with a payment schedule. The program will likely charge you
beyond what you will be paying back to your creditors for their
work, so make sure it is still a good option once these fees are
included.

* Debt settlement is a private industry, so any organization
that speaks of a federal program for debt settlement is not telling
the truth.

* Don’t stand for pressure or silence. A legitimate agency
should not pressure you to enroll and should allow you the time to
make a decision. You should also be able to freely and easily
communicate with the agency before enrolling and during the debt
settlement process. Some programs require you to default on paying
your creditors, so have a plan in place with your settlement agency
on how to handle calls from creditors if this is the case.

For more on debt settlement and answers to frequently asked
questions, visit www.coredebt.com.

Courtesy of ARAcontent