Most of us are not used to having a really serious debt problem, so when it happens it is not surprising that we are unsure about what to do about it.
You may have a vague awareness of debt consolidation or different debt programs, but what you are probably not sure about is how they work or if they are right for you.
This article will help clarify the type of debt programs that are out there and which sort may be best for your particular circumstances.
We will also look at how to make sure you work with a reliable company that will get you out of debt quickly.
When your debts reach a certain point and you begin to struggle to keep up with payments, you need to seek help.
Believe me, things will not get better if you just wait and see.
Debts do not shrink without direct action, they just continue to grow.
This is because they are made up in large part by interest charges and these will build up continually even if you are making payments.
As soon as you begin to miss payments or be late, the extra charges really begin to pile up and your debts will rapidly increase.
So fast action is important and in reading articles like this one you are clearly doing the right thing and trying to find out where to get help.
The type of debt programs you need will depend on your situation.
For most people with fairly serious debts, a debt management plan will work very well.
This reduces your monthly outgoings and allows you to repay everything you owe at an affordable rate.
For this to work you must have a steady source of income and a bit of money spare after paying your essential household bills.
If your circumstances are more serious and you could not keep up with a debt management plan, then you would need to consider debt settlement.
These are basically the two main types of debt programs open to US residents.
Debt management programs are about making changes to the arrangements you have for repaying your debts.
Each of your creditors will be approached by the debt advisor and they will negotiate new terms that involve you paying out less each month.
This is achieved by agreeing to bring down interest rates and often other charges too.
When this process is complete, your debt program is set up and you just have to find one affordable monthly payment, which you pay direct to the company.
Your creditors get paid by the company so you no longer have to deal with them direct.
Whereas debt management is about finding ways to repay all your outstanding debts, debt settlement is an entirely different process.
The success of debt settlement depends on getting agreement to write off a large part of your debts.
This is really an alternative to bankruptcy and is about making it possible to settle debts that you would otherwise never be able to repay.
The incentive for the creditors to settle the debt for less is that you agree to pay the remainder in a lump sum.
This can be done by putting money aside and saving it up in a trust fund, or sometimes the settlement company will advance the money and you pay them back.
Some of the biggest and most well established companies will offer both debt management and debt settlement programs.
This means you do not have to worry too much about which option is the right one, because they will assess your finances and recommend whichever is going to work best for you.
It is important to take steps to avoid disreputable companies, as this business does unfortunately attract some of these, so the safest approach is to only apply to organizations that have been around for some time and that are known to be reputable.
You should also apply to a few so that you have some idea whether what you are being offered is reasonable or not.