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Is bankruptcy my only option for debt relief?

While filing for bankruptcy is a good decision for some people, it is not the only way that you can free yourself from debt. If you are fairly confident that your debt can become manageable with just a little bit of help, your first option may be to simply contact your creditors. Sometimes, providing them with an explanation of why you are behind on your payments, and what you would need to get caught up can be enough to get your fees waived and interest rates lowered.

If your credit score hasn't been damaged by your debt, another option may be to transfer your balances to a zero percent credit card. By avoiding paying interest, you may be able to afford the payments and pay the debt off sooner.

Another viable, but risky, option is to work with a debt settlement company. Instead of paying your creditors each month, you pay the company. Once money accumulates in the settlement account, the company makes the creditor a lump sum offer that is for less than your oustanding balance. The creditor may accept the offer rather than risk getting nothing at all. You run the danger, however, of not obtaining a settlement and even if you do, you may still be on the hook for penalties, fees, taxes and other charges.

Finally, you also have options as far as managing your debt and eventually paying it off in full.  According to Nerdwallet, you could work with a credit counseling agency. You would pay the agency each month, and it would in turn distribute payment to your creditors. Since credit agencies and credit card companies often work together, your payments may be made at reduced interest rates or without certain fees. Your credit accounts will be closed until you pay off the balances, and then you can re-apply for credit.

There are many bogus credit counseling scams out there, so you should practice caution. If you choose to go this route, it is important that you only use a trustworthy credit counseling agency that has been accredited by the National Foundation for Credit Counseling or the Financial Counseling Association of America.

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