Credit Counseling

• Credit counseling is essentially education about debt. It’s a good option for people who miss their monthly payments on their credit cards or other forms of debt; have multiple maxed-out credit cards; have a credit card that’s currently over the limit; or are considering claiming bankruptcy. Credit counselors will look at the money you owe and help you set up a debt management plan. Then, your counselor will negotiate with creditors, often resulting in reduced interest rates and reversed late fees. Also, you’ll be making one payment to the credit counseling company instead of multiple payments to each of your credit cards.
  
  

Debt Settlement

• If paying back your debt is unrealistic, debt settlement takes a more aggressive approach to have a large portion of your debt negotiated away. This is also termed debt negotiation or debt arbitration. While it’s not guaranteed that the creditor will accept the negotiation offer, this approach can effectively lower your owed debt a substantial amount.
  
  

Debt Consolidation Loan

• Debt consolidation loans are used to pay off current debts. Instead of paying each creditor monthly, you’ll pay off just the loan. Initially, you’ll pay off all of your creditors and close that debt, leaving you to pay only the loan. Also, the loan helps to rebuild your credit; each monthly payment to the loan goes toward repairing your credit damage. The purpose of the loan is to save you money, so it’s important to research interest rates and length of the loan before choosing one. You’ll also have to choose between a secured loan and an unsecured loan.
  
  

Student Loan Consolidation

• Multiple student loan payments are easy to consolidate, and if your loans equal more than $10,000, you’ll be eligible for student loan consolidation. You won’t need collateral, a job or a co-signed to consolidate federal student loans. This is a good choice if your loans have different interest rates and maturities. While taking a long time to pay off your student loans may mean more money in the long run, recent graduates will benefit from initial small payments.
  
  

Tax Debt Relief

• The best way to pay off your tax debt is to create a payment plan. If you owe less than $10,000, you’ll pay off your debt within three years. The IRS will allow you to choose a monthly payment amount and the day each month that you’ll make a payment.