Many Americans are experiencing a downward debt spiral due to the economy. So, what are viable solutions if you are deep in debt?

It depends on whether your debt is secured or unsecured. Unsecured debt is debt that is not tied to any asset. Examples are credit card debts, credit lines, unsecured personal loans, etc. If your debt is unsecured, you should avail of the reliable services of a professional credit counselor.

They will help you assess your personal financial situation and provide you with several options to choose. Through their connections with creditors, they are able to consolidate your debts in such a way that you will wind up paying less than you did if you were to pay off your debts yourself.

They also provide valuable services to educate you about personal financial management, with tips that will help you balance your budget every month. Many of these services are free of cost or require you to pay a nominal fee.

So in short, DMP’s are third-party collecting agents that you hire to pay your debts. If you would think about it, not all the reduction in interest rates and fees they obtained for you will benefit you at all because it will only cover the fees you have to pay them for their services. Worst, it may cost you even more.

When you are enrolled in a DMP program and failed to pay your monthly obligation, the DMP’S have the right to kick you out of the program. This means that you are back to square one and you will be dealing with the same problem over again.

BOTTOM LINE: Do not agree to pay the counseling agency any money until you see the results of the negotiations. Also, make sure to ask what the fee is, whether it's a onetime upfront fee, or a monthly maintenance fee.

Back in the days, I signed up with a so-called "non-profit" agency and turns out, they charged a $35 monthly "maintenance fee". I really didn't need credit counseling as I could make my payments on time but I didn't think it through and just wanted to consolidate all my payments. Looking back, I should've just been more disciplined and had a schedule for paying my bills, as I do now.

A program growing in popularity is debt negotiation. This is the process of negotiating with you creditors for a drastically reduced balance. The program takes about 24-48 months to complete. Your monthly payment is reduced and the debt consultants help you get rid of the creditor harassment.

On the flip side, your credit is temporarily affected and the debt collectors may file a lawsuit.
A good credit repair program and attorney consultation provided by the debt settlement company is crucial to successfully complete this program.

If you are deep in debt, the above strategies may eliminate your credit card debt much quicker than making minimum payments.

Author's Bio: 

Joseph Hernandez is the CEO of Debt Free Solutions, a debt consulting agency located in Long Beach, CA. His organization was created in October, 2000. His revolutionary debt program is like no other. Unlike other debt elimination programs, he drastically reduces the risks that are inevitable with all debt negotiation programs. Hence, his clients may be able to get out of debt fast-and safe.

Stop wasting money by making minimum payments. See how our revolutionary debt negotiation program may get you out of debt fast and safe!