What Is Consumer Debt Relief?

Consumer debt relief is the elimination of all of your debt so there is no record of it on your credit report. Consumer debt relief will negatively reflect on your credit score and it will take some time to improve your credit score once you are given consumer debt relief. Consumer debt relief is different than debt consolidation because debt consolidation will simply consolidate your debts but you still must pay them off. Your debt will not be eliminated, where as with consumer debt relief it will be.

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Debt Settlement and Bankruptcy

Two popular and most used forms of consumer debt relief are debt settlement and bankruptcy. Both of these forms of consumer debt relief will eliminate your debt but your credit score will be impacted negatively.

Debt settlement is used when you hire a debt settlement service to negotiate with your creditors for lowering the amount of debt you owe or prolonging the time when you can pay your creditors back.

Bankruptcy is stating in court that you cannot repay the debts and your debts are eliminated with costly financial ramifications for you. If you do plan on filing for bankruptcy you should use a bankruptcy attorney. These two forms of debt relief are the last options you should take to eliminate your debt.

Debt Relief Vs Debt Consolidation

Debt consolidation is different than debt relief, as it does not eliminate your debt right off the bat but allows you to do it yourself. You can use debt consolidation services or credit card counselors to help you get your debt under control and pay it off. These services will negotiate with your creditors to try to get your lower interest rates and to have your creditors waive various fees and charges that you have accumulated because of your outstanding debt.

It is always better to first see if debt consolidation is available to you before trying to obtain debt relief. The reason for this is simple: debt consolidation can help you pay off your debts yourself and your score on your credit report will improve, if you pay off your debts in a timely manner, while debt relief will negatively impact the score on your credit report.

Other Measures

Before taking the drastic financial measure of debt relief there are some things you can do to help yourself get out of debt. Debt consolidation and credit card counseling services can be an option but there are also other things you can do to eliminate your debt. If you are a homeowner you may be able to take out a home equity loan or obtain a line of credit in order for you to pay off your debt. A few of the other things you can do are make sure you pay your bills on time, spend on your credit card wisely, and (if you have decent to good credit) call your credit card company and see if they will lower your interest rates.

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