Debt relief isn’t always cut and dry when it comes to how it helps you. Most people know that some form of debt relief can rid them of their debts. However, it isn’t always clear which form of debt relief will work for an individual. More so, it can be hard to know how helpful these programs and actions can actually be. Here’s a clear cut debt relief guide that will answer some lingering questions about the options we have to us in regards to debt.

The Definitive Debt Relief Guide

There Are Four Types of Debt Relief

While many people know that they have multiple options to eliminate their debts, not all are aware of what they all are. There are four types of debt relief: debt settlement, debt consolidation, credit counseling and bankruptcy.

They Each Affect Your Debt Differently

The four methods differ drastically, from the barely noticeable to the total eradication. The level of involvement correlates with your ability to pay your debts. The less ability you have to pay your debts, the more involvement your form of debt relief should have.

You Might Have to Pay for Debt Relief

In certain instances, debt relief will cost you. Bankruptcy will require a lawyer to file for you, so you’ll need to pay. Debt settlement might require you to pay if you use a third party to settle your debts. Debt consolidation requires no money transaction for services rendered as it’s the equivalent of taking out a loan. Credit counseling can be free, but there are some counselors who charge for their services. Make sure you’re careful about who you choose.

There is No Perfect Debt Relief Plan

Every debt relief plan has negatives to it. Most people know about the negative aspects attached to bankruptcy (derogatory mark on your credit for up to ten years), but they exist. Credit counseling, while free, only gives advice on dealing with debt. Debt settlements might have to be listed as income on your taxes, potentially altering your tax returns. Debt consolidation will require a credit check to complete, resulting in a hard inquiry and a potential rejection for lackluster credit.