Often people who are heavily in debt are looking two options. The first option is drastic and includes filing for bankruptcy protection which will either eliminate or drastically reduce your unsecured debt. The other option is to use a debt reduction or consolidation service to manage your debt and help you develop a plan to get out of debt.



You should try to do everything you can to avoid bankruptcy, as that will be reported on your credit report for up to 10 years. Using a debt reduction or consolidation service will allow you the time you need to pay off your debt while allowing you to meet your responsibilities to your creditors, which is looked at much more favorably than filing for bankruptcy, thus doing less damage to your credit report.

Getting rid of your unsecured debt should become your top priority. This is often the type of debt that causes the most problems and is the hardest to get rid of.

The way debt reduction or consolidation organizations work is they negotiate on your behalf with your creditors to come to terms that are beneficial to both them and to you. In doing this they can often work your payments into as much as 60 percent less than all your individual payments together, thus giving you much needed breathing space in your monthly budget.

They can also help you to avoid filing for bankruptcy protection, which can be reported by credit reporting agencies for up to 10 years. This kind of credit report can make it very difficult to obtain any type of financing in the future – both secured and unsecured.

The first think the debt consolidation or reduction agency will do is to help you to come up with a list of all your debts, how much you owe and what your current monthly payments are. Then they will help you by going over your budget to find out how much you can actually afford to contribute every month to your debt repayments. Then they will negotiate with your creditors to accept payments that are within your ability to pay.

Debt consolidation or reduction companies are often times non-profit agencies and do not charge any type of fee. Some of them do charge a small fee to cover the costs of their operations. It is important to find a legitimate agency to work with.

Don't wait too long to start digging your way out of debt.