Debt Relief Blog and Resources

Have you ever trusted a company that ended up letting you down? Not only is this a horrible feeling, but it can also lead to financial ruin if you had invested a large amount of money in the business.  Companies that advertise debt relief sometimes sound too good to be true — can a company (that is trying to make money itself) really save you money or help you work toward being debt-free in a way that doesn’t leave you worse off? Can debt relief companies really be trusted to have your best interests in mind? The short answer is yes, some can. Legitimate debt relief companies do exist, but you as the consumer need to know what to look for in a company so you don’t end up getting scammed. Below, we’ll detail the signs of a trustworthy debt relief company, as well as some common myths about debt relief. We’ll ultimately answer this question: should you use a debt relief company?  In the end, you’ll be equipped to ask all the right questions to a debt relief provider and better identify a shady company well before you commit any of your own money to it. What are the signs of a trustworthy company? 1. Doesn’t make money until you save money A debt relief company may be in business to make money, but a trustworthy one will only make money if it also helps you settle your debt for less than you owed before, or if it helps you save money in other ways. These ways can include negotiating a lower interest rate for your debt or helping you pay off your debt in less time to minimize interest charges. You should beware of a company that charges upfront fees and doesn’t have a refund or money-back guarantee policy associated with those fees. You should also beware of a company that charges you whether or not it actually helps your financial situation improve. Top debt relief companies such as National Debt Relief and Freedom Debt Relief do not charge upfront fees for their services. This indicates that the company is legitimate and can be trusted to handle your finances without stealing your money. 2. Offers a free consultation A trustworthy debt relief company will offer a free consultation, either in person or over the phone, to discuss your financial situation, the amount of debt you owe, and other relevant factors that may determine whether or not you would be a good fit for the company’s services. If you come across a company that charges for this initial consultation, just know that most top debt relief companies do not. You shouldn’t have to pay anything up front to learn about a debt relief company and decide if you want to enroll in its debt management program. 3. Holds industry accreditations Trusted debt relief companies typically hold at least one, if not multiple, industry accreditations. These recognitions come from third-party organizations and set standards of ethical behavior in the debt relief industry. One word of warning, however: "Accreditations are only as valuable as those doing the accreditting...and for the most part (in the debt relief industry at least) that is going to be founders of major [debt relief] companies," says Adam Selita of thedebtreliefcompany.com. So you'll want to beware of any bias there. If you notice that a company is accredited with a multiple trade organizations such as the American Fair Credit Council (AFCC) and the International Association of Professional Debt Arbitrators (IAPDA), this signals that the company cares about providing legitimate and certified help to its clients. 4. Has plenty of (positive) customer reviews One of the most important indicators of a reliable debt relief company is positive reviews from multiple customers. Both positive and negative reviews can help you determine how the company treats its customers and how people feel about their interactions with company representatives.  However, if the majority of customer reviews or even a large minority are negative, this should be cause for concern. Make sure to read what customers are actually saying to determine if their negative experience was an isolated incident or if multiple customers have had the same problem. With debt relief being so closely tied to your financial situation, you need a company that continually pleases its customers and keeps its word. The best way to know if it does this is to read debt relief reviews yourself. --- Now that we’ve established the signs of a trustworthy debt relief company and what you should look for as a potential customer, let’s dive into some common myths in the debt relief industry and find out what you really can believe about debt relief. Common debt relief myths: debunked We asked experts in debt and finance to debunk some common myths or misconceptions related to debt relief. Just remember, every individual’s financial situation is unique, so while these debunked myths can alleviate some concerns you have about debt relief, they might not answer the exact questions you have.  To get your specific questions answered in a way that meets your needs, we suggest consulting a certified financial planner or credit counselor. Myth 1: Debt settlement companies can’t really help. Many people worry that a debt relief company will just rip you off. However, according to Andrew Latham from SuperMoney.com, “debt settlement companies can be expensive, but, on average, they can save clients two to three times what they pay in fees.”  You can always find cheaper debt relief options than working with a debt relief company, but your DIY or other solutions might not include the expertise, credentials, or experience that a debt relief company can offer, similar to how working on your own car may not produce the same quality of results as hiring a certified mechanic would. Contrary to what you might think, many debt relief companies really do have your best interest in mind and want to help alleviate the financial burden you are carrying. Just look for “legitimate companies with proper licenses,” advises Rasti Nikolic from LoanAdvisor. Myth 2: You have to pay for debt help. Debt relief companies seeking to make a profit are just one of many options you can turn to to get help with your unmanageable debt.  “There are plenty of debt charities out there and free online services that do not require that you pay anything throughout the process, and even those debt relief companies you do have to pay won't hide any fees or costs and won't make you pay for anything you don't agree to,” says Scott Nelson from MoneyNerd. If the idea of spending money to save money sounds ridiculous to you, you’re not alone. Your best bet might be to find a nonprofit credit counseling service or debt relief agency, such as Greenpath Financial Wellness, that can help you work towards getting out of debt with fewer fees or less     impact to your credit score. Myth 3: Debt is impossible to get out of. This is simply not true. Not only can you take steps to manage your debt so that it doesn’t consume your life, it is also completely possible to become debt free with the right kind of help. “The best thing to do is research all your options, start a budget, and set goals,” according to Nelson. Sometimes, the weight of debt can feel so crushing that it almost seems easier to hang onto it than to try to pay it off. This feeling is completely understandable and common. However, you don’t need to lose hope of being debt free. Many honest debt relief companies do exist, and while they still seek to make a profit, their strategies and know-how can be of great help to you, and as we mentioned earlier, good companies only make money if they do actually help you save money or settle your debts for less than originally owed. So don’t give up! Debt relief is a process, but being debt free is a realistic and attainable goal. Myth 4: Debt relief will take forever Just as debt accumulates over time, “debt relief requires commitment and time” (Lou Antonelli, Beyond Finance). The debt relief process typically takes 24–48 months to settle all possible debts, but this is small in comparison to a lifetime of debt if you leave it unresolved. According to a 2021 Harvard Kennedy School report, 74 percent of people who start a debt relief program have at least one account settled in the first 36 months, and in fact settle over half of their enrolled debt on average during this same time period. These are encouraging statistics and hopefully help you realize that in the grand scheme of things, debt relief doesn’t take forever at all, and may be well worth your time if you are feeling financially buried and looking for a way out. Myth 5: You can’t negotiate debt on your own. According to Fred Hoffman from Seniors Life Insurance Finder, “there is nothing wrong with trying to negotiate with your creditor by yourself.” While this is the case, this doesn’t mean that negotiating with creditors is easy. A debt relief company comes with a staff of certified debt experts who have worked with creditors across the country and settled debt before. If you are trying to negotiate without any help, you forfeit this additional expertise. However, if you have some finance background and feel confident in your negotiation skills, it is completely possible to negotiate your own debts and try to reach a settlement with your creditor(s). -- Now that you know how to identify a legitimate debt relief company and have clarified some incorrect information you may have heard about debt relief, the question remains: is debt relief right for you? Should you use a debt relief company? The answer to this question will always be "it depends." However, we asked debt relief experts what makes an ideal candidate for debt relief services, and here’s what they shared. If you check enough of these boxes, debt relief might be for you: If you’ve identified yourself as a good candidate for debt relief, you can find trusted, top debt relief companies using your newfound know-how, and ultimately, you can avoid trusting the wrong company to negotiate down your debts. Happy debt relief!

Guest Post by Ben Walker Traveling is an excellent way to broaden your horizons, whether it’s exploring a landscape you’re not familiar with or immersing yourself in a new culture. But it can get expensive. According to a 2021 travel trends report from AARP, millennials plan to spend $4,017 on travel for the year, Gen Xers plan to spend $5,028, and baby boomers plan to spend $6,691. These numbers can vary depending on your destination, the number of people traveling, and your length of stay. But after accounting for flights, hotel stays, a rental car, activities, food, and other common travel expenses, you can easily find that your total trip ends up costing thousands of dollars. Do you want to travel but think it might put you into debt? Here are five ways to approach traveling without ending up owing anyone money. 1. Start a travel budget Budgeting is one of the most effective ways to save money for specific financial goals, which could include saving up money for a trip. There are different budgeting techniques, so you should choose the one that works best for your situation. That could mean taking a certain amount of money out of each paycheck or having a goal to hit each month — just use whatever strategy fits your lifestyle and helps you stay motivated. Regardless of the budgeting method, track your total income and expenses. This will give you an overview of your financial situation and pave the way for making smart future decisions. And tracking your finances is easy with certain finance management tools. Once you know the exact amount of money coming in and going out, focus on the areas where you might be able to cut your spending. This can be helpful if you feel like you have no room left in your budget to start setting money aside. But if you have room to cut back on unnecessary spending, you have room to fund your travel savings. To potentially make things easier for yourself, consider setting up automatic transfers from your main bank account to a specific account for your travel budget. 2. Use the right credit cards You might think that using credit cards would result in more travel debt. And in some cases, that could be true. It’s easy to throw all your travel expenses onto a credit card and then worry about paying it off later. But this type of strategy can quickly lead to racking up credit card debt that soon becomes too difficult to manage. If instead you approach credit cards with the mindset that they’re tools to be used for reaching your financial goals, you might be more likely to exercise some caution. This doesn’t mean you can’t use credit cards for all your travel expenses, but you should only do so if you’re planning to pay off your balances each month. Using this method, it makes sense to use the best travel credit cards to fund your travels. You can earn credit card rewards on all your eligible expenses, including everyday purchases such as groceries and gas. These rewards can then be used to help cover flights and hotel stays, which are often two of the biggest travel costs. Be sure to compare different credit cards and the rewards they earn so you can get the most out of your credit card rewards. 3. Stay flexible with your plans It may not always be possible to have flexibility with your travel plans. You might have one window of vacation time that you can use during a certain month of the year and that’s it. If this is the case, you unfortunately won’t have as many options for decreasing your travel costs. But if you’re able to be flexible with when and where you travel, you can find a lot more budget-friendly options. Peak times will vary depending on your destination. But, for example, many Americans want to travel during the summer months because their kids are out of school and the weather is nice. This causes prices to rise in certain areas for flights and hotel stays because a lot more people want to travel during these peak months. If you’re flexible with your plans, you can avoid traveling anywhere during a destination’s peak season(s), which should cut your travel costs by a fair margin. Being flexible on your destination itself can also help cut costs. If you simply want to visit an area with beaches, you could save a lot of money by traveling to the relatively inexpensive countries of Southeast Asia rather than taking an expensive trip to the Maldives. 4. Do your research Along with having some flexibility in your travel plans, you should also do the proper research on where you’re traveling before the dates of your trip. This includes knowing how you’re getting there and back, where you’re staying, and what you’ll be doing while you’re there. Apart from giving you a plan for your travels, doing research can also offer opportunities for you to save money. For example, it’s easy to book a flight through an airline’s website, but how do you know you’re getting the best deal? To compare flight prices, use tools like Google Flights, Skyscanner, Kayak, and others to see which airline and flight route might offer the most savings. This same strategy can be used for hotel stays and car rentals as well, though the sites you use will likely be different. Even if you’re planning to use credit card rewards to book award flights or award stays, this type of research can help you save points and miles. You can then use your saved rewards on more travel opportunities, further decreasing your travel costs. 5. Consider travel insurance Do you need travel insurance while traveling? Not necessarily, but it’s not a bad idea. In many cases, travel insurance is cost-effective and could help you recoup expenses for unforeseen circumstances that arise during your travels. For example, what happens if you have to cancel your trip? Or what if you incur emergency medical expenses while overseas? Credit card travel insurance can cover certain things, such as trip interruptions or cancellations, but a travel policy from an insurance provider is typically more robust. If a travel insurance plan that costs a few hundred dollars covers you for thousands of dollars worth of medical treatments or pays to replace your expensive smartphone, the policy more than pays for itself. The bottom line Overall, there are plenty of ways to avoid travel debt, though the best ways for you will depend on your lifestyle and financial goals. But before you consider saving up for traveling, you should first pay off any debt you may already have.  Traveling will likely cost some money, even if you follow these tips. So going on a trip before tackling existing debt may not be the most financially sound course of action. Learn how to pay off debt beforehand, and you’ll have more financial freedom to start your travels. Ben Walker is a credit cards and travel writer at FinanceBuzz who loves helping others make informed and financially sound decisions, especially when it comes to traveling the world. He does this by explaining key principles involving credit cards, budgeting, banking, insurance, investing, and more.

Guest Post by Orlando Rodríguez  DISCLAIMER: The information provided in this article does not, and is not intended to be, legal, financial or credit advice; instead, it is for general informational purposes only.  Debt settlement is when creditors or collection companies agree to clear a debt for less than you owe. It sounds simple in principle — and very convenient — but is it a money-saving tactic or a credit trap? What are the risks of debt settlement, and what are the alternatives? If you’re confused by debt settlement, you’re in the right place. In this brief guide, we’ll explore what the term means, and how it can affect your credit. What is debt settlement? When you settle a debt, you pay your creditor or a collection agency less than you owe, including existing interest and fees. Debt settlements are usually lump-sum payments, though some organizations allow consumers to set up payment plans instead. Debt settlement pros include: Reduced pressure from creditors A fresh financial start The chance to avoid bankruptcy The risks of debt settlement include: Serious credit damage Unexpected tax bills Extra fees and penalties Before you negotiate with a creditor or collection agency, think seriously about your options. Don’t make any decisions until you know what you’re up against. What are the advantages of debt settlement? We touched on the advantages of debt settlement briefly above. Now, let’s look at each plus point in a little more detail.  Reduced financial pressure Debt can feel like a crushing weight. Constant calls from creditors and collection agencies cause anxiety, and the guilt associated with outstanding debt can lead to mental health issues. Perhaps unsurprisingly, getting rid of a debt can bring emotional relief. A fresh start If you currently pay a lot of money toward your debts every month, opting for debt settlement could help you find financial balance in the long term. Debt settlement offers don’t appear by magic — it takes a while before creditors begin to negotiate — but they’re a quicker route to a debt-free status than minimum payments. After you eliminate your debts, you can start again. That’s perhaps the biggest debt settlement plus. No bankruptcy Debt settlement can help you avoid bankruptcy. If you have assets you’d rather not part with, or you’re worried about the impact personal insolvency might have on your small business, you could be better off settling your debts than filing for Chapter 7 bankruptcy. If you’re hovering between bankruptcy and debt settlement, consult with a financial professional to find the best option for you. What are the negative effects of debt settlement? It’s wonderful to imagine a fresh start—an end to overwhelming monthly payments and the shame associated with unmanageable debt. There are downsides to debt settlement, however. Serious credit damage When you settle a debt for less than you owe, it makes a negative impact on your credit report. When you negotiate settlement terms and your original contract with the lender is modified, you’ll damage your payment history and your credit score will go down. Unless you’re able to negotiate to have them removed, delinquent payments and collection accounts will stay on your report for seven years—even if you settle. The impact on your credit score depends on the terms of the settlement and how it’s reported on your account. Unexpected tax implications Many people are surprised by the tax implications of debt settlement. When you settle a debt for less than you owe, part of it is written off—and the IRS sometimes considers the forgiven portion taxable income. On the face of it, that doesn’t seem fair—after all, you didn’t physically receive the forgiven portion of your debt. Nevertheless, you may need to report that amount to the IRS and if applicable, pay taxes on it. The tax-related rules that apply to debt forgiveness are pretty complex. To find out where you stand, ask an accountant or a financial advisor before settling debt. Extra fees and penalties Debt settlement strategies take time to come to fruition. While you wait for an opportunity to negotiate, your unpaid debts will accrue interest and fees. Sometimes, collection agencies charge additional recovery fees, which they apply when they agree to a settlement. If you agree to the settlement amount, if part of your agreement, you’ll also need to pay those fees. What are some alternatives to debt settlement? Not sure debt settlement is right for you? In that case, consider these alternatives: Renegotiation — Ask your creditors for an interest rate reduction, or talk to them about reducing monthly payments. Debt consolidation — Consolidating your credit cards and loans into one single lower monthly payment can greatly reduce the amount you spend on debt every month.  Credit counseling — If you have trouble creating a workable budget and need help figuring out your finances, speak to a credit counselor or financial advisor. A debt management plan — Under the terms of a DMP, you make payments to reduce the amount you owe to all your creditors at once. Chapter 13 bankruptcy —Your finances get reorganized and you make court-mandated payments for a set amount of time after you file for Chapter 13 bankruptcy.  Chapter 7 bankruptcy — Chapter 7 bankruptcy wipes the slate clean—but it’ll be difficult to obtain credit for a while, and the bankruptcy will stay on your record for 10 years. Bankruptcy is arguably the most extreme solution to debt. Consumers who opt for Chapter 7 bankruptcies have to liquidate many of their assets before they’re deemed debt free. Under the terms of Chapter 13 bankruptcies, people are allowed to keep some of their assets. Chapter 13 is safer if you own your own home or have valuable possessions you want to pass on. Speak to an experienced financial advisor and consult with a bankruptcy lawyer before choosing voluntary insolvency. How do you settle a debt? If you decide to proceed with a debt settlement strategy, you can take a DIY approach or work with a debt settlement company. Let’s review both options.  The DIY route Creditors are unlikely to negotiate with you if they believe you can continue to make monthly payments or that you can pay the debt in full. To move into debt settlement territory, it’s best if your accounts are already delinquent by at least 90 days. If you want to continue missing payments while negotiating, know that there are serious credit-related ramifications associated with terminating payment in this way.  So, consider keeping up with payments while at the same time building a lump sum to pay off the debt. Before you quit paying, talk to your creditors about reducing monthly payments.  If you do stop paying your loan or credit card bill, late charges and fees will accrue and your credit score will drop. So, if you go the DIY route, know what you can and can’t afford to do, and find an agreement with the creditor that works best for your situation.  Note: Remember, your credit score will drop dramatically if you stop paying your debts, so you’ll find it very difficult to obtain a loan or a credit card—possibly for years. A settlement company If you have a lot of debts to settle and haven’t been able to negotiate with your creditors independently, a settlement company can help take the pressure off. Settlement companies negotiate with your creditors on your behalf, reducing the amount of direct contact you have with the companies you owe money to. Settlement companies usually charge fees. So, it’s important to factor those into your payment estimates. On the flip side, they can help you recover a sense of financial stability and may also provide budgeting advice.  Note: It’s hard to define what percentage of a debt is typically accepted in a settlement. Some companies won’t take less than 70 percent of what you owe, while others will go as low as 30 percent. Is debt settlement really worth it? In short, debt settlement is sometimes worth it if you can’t afford to pay off what you owe in full. If the risks of bankruptcy outweigh the benefits for you, and if you feel trapped under a mountain of debt, a settlement offer might bring peace of mind. If you decide to settle one or more of your debts, seek advice from a qualified tax professional about tax implications. Draft a savings plan to ensure you have the money to pay any taxes you owe at the end of the year, and create a solid budget to keep your finances on the level in the future. Finally, check out credit repair options, some of which could help you rebuild a solid credit profile. Orlando Rodríguez is a writer and content specialist for the Credit.com team dedicated to creating helpful, informative and eye-catching content. He completed his undergraduate work at the University of Utah focusing on Film and Media Arts. He’s written blogs and journalistic content for many different industries, and narrowed down his niche to the financial industry. In his off time, Orlando puts effort into crafting creative content around the arts.

Guest Post by Erin Ellis The COVID-19 pandemic has touched nearly every facet of our lives, from how we work and learn, to the ways we shop and spend time with our loved ones. Above all else though, the pandemic has shaken Americans’ financial security. According to the U.S. Department of Labor, over 55 million people have filed for unemployment since the beginning of March. While some of these folks are back to work, others may have months ahead of them until they can find a stable income again. Whatever your situation during this unpredictable time, there are a few things you can do now to ease your mind, begin to move forward, and ultimately recover from this crisis.  Understand you’re not alone  It’s important to note at the offset that if you’ve been laid off, furloughed, or lost hours or income over the past few months, you’re far from alone. Millions of people globally are also grappling with financial hardship. Although it is difficult to not let the uncertainty and strain of your financial situation weigh on you, try to focus on accepting it. The sooner you come to terms with your new reality, the sooner you can be in the right headspace to create a game plan and move forward with recovery. But also, try not to be too hard on yourself. As we all know, we’re living in unprecedented times, and no one could foresee how this year would unfold.  Get back to the basics Whatever your situation is, if you find yourself in dire straits, get back to the basics. First, take stock of your income and savings. If you’ve been laid off, how much will your unemployment benefits net? If your hours are reduced, what is your new weekly and monthly income? And how much do you have in savings to fall back on? Keep these numbers in mind.  Reevaluate your budget Next, use these numbers to reevaluate your budget and determine what you need to spend, what you can skip, and where you can cut corners each month. For example, groceries and toiletries are items you absolutely need, but you can be strategic about how you shop for them. Mortgage or rent payments, utility bills, and car payments most likely need to be paid, unless there’s a moratorium on bill collection, in which case you can skip these payments temporarily.  You should also call your creditors to make arrangements regarding your payments. This helps in two ways: 1) You might be able to arrange a lower payment or later payment date and 2) You are protecting your credit and service by having an agreed-upon payment arrangement.   Your budget on takeout, Netflix, and shopping, should be significantly reduced, if not cut altogether. Make every dollar count  Once you’ve determined what you need to spend each month, make every dollar allocated towards these necessities count. That means being mindful of what items are on sale at the grocery store, shopping wholesale at Costco or Sam’s Club, clipping coupons (Yes, those mile-long receipts at CVS can save you a ton!), and thrifting whenever possible. Lean on your network  Once you have your financial house in order, work on getting back on your feet. If you’ve been laid off, let your entire network know you’re in the market for a new job on your social media platforms, especially Facebook and LinkedIn. Refresh your resume and set up virtual networking meetings with potential new employers. If you’ve been furloughed or have reduced hours, still reach out to your network – you never know what odd job or part-time opportunity could earn you some extra cash in the meantime. Most importantly, be open to taking a position that’s outside of your wheelhouse. While it may not be your dream job, it will help you get back on your feet.   Have a plan for next time Yes, we all know that even the best-laid plans can go awry, but when it comes to your finances, you can never be too prepared. Factors outside of your control, like a stock market crash or a global pandemic, can occur at any time. While you may not find yourself on solid financial footing in the near term, once you do, it’s important to have a plan for next time — because there will be one.  Off the bat, you can start to build a rainy day fund by opening a high-interest savings account, setting up automatic transfers from your checking account each month, and adopting a low-spend lifestyle so you can put extra money away. Also, know who you can lean on, like a spouse, parent or friend, if push comes to shove.  While financial recovery may seem like a daunting task, you’re far from alone in this journey. Millions of people around the world are also grappling with the fallout — both physically and financially — of COVID-19. Although the path to financial recovery is not easy, by getting back to budgeting basics, stretching your dollar, and leaning on your network, you’ll be on your way to solid ground. And when crisis strikes again — which, inevitably, it will — you’ll be prepared with a rock-solid plan.   Erin Ellis is a Financial Educator and Accredited Financial Counselor at Philadelphia Federal Credit Union (PFCU), one of the top five credit unions in the Greater Philadelphia area. Her chief responsibility is to give members the tools and knowledge they need to better manage their money and achieve their financial goals. In this role, she is responsible for creating PFCU’s financial education curriculum, providing one-on-one counseling with members, and presenting seminars on various personal finance topics, including, budgeting, saving money, credit, identity theft, and homebuying to PFCU members and a wide network of social services organizations throughout the Philadelphia region. 

If you have overwhelming debt that you’re ready to pay off, you may be interested in getting help from a debt relief company. Debt relief companies can help borrowers eliminate their credit card debt, student loan debt, medical debt, and other types of unsecured debt through debt settlement and debt consolidation. But with more than 100 debt relief companies listed on BestCompany.com, how do you know who is the best debt relief company to work with? The more than 19,000 real customer reviews offer some insights. If you’re looking for a debt relief company, consider these factors from 5,888 reviews from verified customers from May 31, 2018 to May 31, 2020.  Great customer service Customer service was a common theme in both positive and negative debt relief company reviews. Out of 5,053 five-star reviews, about 22 percent mention “service,” while about 11 percent of one- and two-star reviews mention “customer service.” Resolving your debt can take anywhere from a few months to several years. Choosing a company that answers your questions in a timely manner can make the process much smoother. One verified customer of Freedom Debt Relief, the highest-rated debt relief company on BestCompany.com, wrote that the company has an entire team of people it can refer customers to if the customer service representative they speak with can’t answer their question. “They do what they say they're going to do and give great support,” Angela wrote. “I'm very confident in them and very happy I signed up.” Clear terms Make sure to get a clear understanding of how your debt relief program will work, including how long it will take. Many negative reviews of debt relief companies mentioned misunderstandings over the timeline.  For example, Eric from Jersey City, New Jersey, wrote about Freedom Debt Relief, “I did not like the uncertainty of the end cost and graduation date moving all over the place. I always paid on time and more than the agreed amount, but the graduation date currently extends several months beyond the four-year agreed period. This is not at all what I understood when I signed the agreement.” Be sure to find out how long it could take to finish the debt relief process.  Other reviews complained about not realizing debt settlement might open them up to legal action or negative effects on their credit score. If you’re pursuing debt settlement, it’s important to understand that withholding payment from your creditors could lead to them pursuing legal action against you and will likely lower your credit score, as well. Only work with debt settlement companies that are honest about these risks upfront. The right kind of debt relief services While some debt relief companies offer both debt consolidation and debt settlement, some only offer one or the other.  Debt consolidation is consolidating several debts into a single debt, often through a debt consolidation loan. Debt consolidation is often a better option for those who have a good credit score, as this can help borrowers obtain a consolidation loan with a lower interest rate. Debt consolidation may also be right for you if high-interest debt is a concern. Debt settlement involves negotiating with creditors to have part of your debt forgiven. When you enroll in a debt settlement program, you typically stop paying your creditors and instead save that money for a later lump sum payment. Meanwhile, the debt settlement company works on negotiating with your creditors to reduce your debt, in exchange for paying it off in a lump sum. Debt settlement often hurts your credit score initially, when you stop making payments, and it could result in higher taxes because the IRS considers forgiven debt to be taxable income. But it could also reduce your total debt amount significantly. Debt settlement may be the right option for you if you’re most concerned about the amount of debt you hold. Once you decide whether you’re interested in debt consolidation or debt settlement, make sure you choose a company that offers that service.  Affordable pricing The cost of debt relief services came up frequently in BestCompany.com debt relief reviews. About 12 percent of reviews from verified customers mentioned the words “money,” “cost,” “price,” or “fee.” Even a five-star review of Freedom Debt Relief from a verified customer mentioned high prices as a negative. “Their negotiations are excellent but their fees (are) a little high,” Anita wrote. Some debt relief companies base their prices on a percentage of the customer’s enrolled debt, some base their pricing on the amount of money they save the customer, and others simply charge a flat-rate fee.  A flat-rate fee may be a good option if you have a large amount of debt you’re planning to enroll in a debt relief program. Performance-based pricing is also a good sign in a debt relief company — this pricing model demonstrates faith in the company’s ability to save borrowers money on their debt.  Before you sign any contracts, be sure to find out all the fees associated with the company’s debt relief services.  Compatibility with your situation Debt relief companies have different requirements and availability. For example, not all debt relief companies operate in every state. As you’re narrowing down your options, make sure the companies you want to work with operate in the state where you live. Some companies offer services in states where they don’t have a physical presence. If you don’t mind working with a company over the phone or email, that may not be a problem for you. However, if it’s important to you to be able to meet with company representatives in person, make sure they have an office location that’s accessible to you. Many debt relief companies also have minimum debt requirements; if your total debt amount is lower than the minimum debt requirement, you won’t be able to use the company’s services.  One reviewer wrote of Pacific Debt, “They couldn't offer any kind of debt relief because your debt had to be 10,000 or more.” Also be sure that the debt relief companies you’re interested in handle the kinds of debt you hold. Some companies specialize in certain specific kinds of debt, and some debt relief methods only work for unsecured debt.  Finding the right debt relief company You can avoid many problems down the road if you do your research upfront, making sure to choose a debt relief company that offers the right kind of services for your specific situation, with affordable pricing and great customer service. One way to find those companies is to compare debt relief company reviews from real customers. Once you’ve narrowed down your list of potential companies to work with, it’s also a good idea to take advantage of a free consultation and speak with a company representative, asking any relevant questions about the services they provide. With research and data on your side, you can find the right debt relief company for your needs.

Americans held more than $4.3 trillion in debt as of July 2021, according to the Federal Reserve. There are tons of potential sources of debt for the average person, including mortgages, auto loan debt, student loan debt, credit card debt, medical debt, and tax debt. If you have debt from multiple sources, you may be wondering where to begin paying it down. Should you choose based on the lender? The principal? The interest rate? There’s no one right answer. “The repayment strategy really depends on your personality and what will ensure that you stick to the plan,” says finance coach Maggie Germano. "You should use the repayment strategy that you know will be the most motivating to you." “In the end, the most important thing is that you’re working to repay all of your debts,” FinanceBuzz writer Matt Miczulski agrees. Here are some factors to consider when it comes to debt repayment: Start with the minimum monthly payment Your starting point should be to ensure you consistently make the minimum monthly payment on each debt. Making the monthly minimum payment on each of your debts will keep you from racking up extra interest and fees that add on to the principal.  And making your minimum payments on time will not only keep your debt from growing; it will also improve your credit score. Then, put as much additional money as you can toward the monthly payment of one debt at a time. Once that debt is repaid, start on the next. If you’re having trouble making the minimum monthly payments on your debts, consider using the services of one of the top debt relief companies. A debt relief company can provide solutions including debt consolidation and debt settlement.  Keep timing in mind For some debts, the interest rate may change over time. For example, you might have a loan with a variable interest rate, or a credit card with an introductory interest rate. In those cases, you'll want to pay down the principal while you can take advantage of lower interest rates — especially in the case of credit cards. "That is because once that (introductory) period ends, the interest rate is going to skyrocket, and a lot of the time, the interest will be retroactively applied, so it will be a large sum," Germano says. When you decide which debt to focus on repaying first, take into account any changes in interest rates that may be coming up. Use the debt avalanche method The debt avalanche refers to a popular strategy where you pay off debt starting with the loan that has the highest interest rate. The thinking behind this strategy is that the higher the interest rate, the more money the debt costs over time. Tackling high interest debt first, such as credit card debt, should save you money, no matter your financial situation. "High interest rates on credit cards can be debilitating as they make your balances get bigger and bigger," Germano says. "Plus, you're more likely to be able to defer something like student loan payments if you are going through hard times. Credit card companies usually aren't as understanding." Consider the difference the interest rate can make in paying off a $10,000 debt. If you have a student loan of $10,000 that you borrowed at a rate of 3.25 percent, it will cost you more than $2,600 in interest alone over 15 years. Paying off the same amount of money in credit card debt at an interest rate of 24.99 percent would cost you more than $7,600 in interest alone over only 5 years. “If it’s important for you to save the most amount of money in the end, focus on paying off your most costly debts first,” says Miczulski. “While it might take longer to tackle each debt, it will save you the most money in the long run.” Use the debt snowball method The debt snowball refers to a strategy where you pay off debt starting with the smallest debt. Financial coach Dave Ramsey is a big proponent of this strategy. The idea is that even though you save more money by paying off debts with the highest interest rate first, starting small helps you gain momentum and build motivation by eliminating debts quickly. "If you're someone who needs to see progress and who benefits from celebrating small wins frequently, the snowball method is probably the best repayment strategy," Germano says. "That's because this method allows you to meet smaller goals sooner and more often than big goals." Miczulski started out with the debt snowball when he was saving for his wedding. "It felt so good that I knew I could start chipping away at my most expensive debt and, while it would take longer to pay off, I knew I’d stay motivated until I saw it though," Miczulski explains. The bottom line: Do what works for you There's no one-size-fits-all approach to paying off debt. What worked for your neighbor or accountant or the finance blogger you follow might not work for you. Maybe you, like Miczulski, will start out with one strategy and then shift to another. Or maybe you'll use a combination of several strategies. Just remember that if the goal is to get out of debt, then whatever method works for you is the right one.

There’s a reason so many books and blogs are dedicated specifically to women and finances. Like many other areas of life, women don’t always face the same financial problems and situations that men do.  Compared to men, women generally earn less money throughout their lives, leaving them with leaner resources to cover higher healthcare expenses and longer lives. But that doesn’t mean women are doomed to falling short of their financial goals. Key Takeaway: Financial management is worth your best efforts. Negotiating salary and other perks yields dividends throughout a career. Investing is an important part of wealth accumulation. A health savings account, or HSA, allows people to set aside pre-tax money to pay for certain medical expenses. Funding traditional IRAs and 401(k) plans is especially beneficial because that allows the owner to make use of pre-tax contributions. Women who need help paying off debt can use the services of one of the top debt relief companies. Here are five money tips for women: 1. Increase income Women who worked full-time, year-round in 2017 made about 80 percent of what their male counterparts did, according to the U.S. Census Bureau. The Pew Research Center says this gap in earnings has stayed about the same over the past 15 years.  Some experts theorize that this is at least in part due to women not negotiating their salaries as frequently or successfully as men do, which stifles their earnings for years to come. Linda Babcock, an economics professor at Carnegie Mellon University, said in an interview with NPR that people who don’t negotiate salary at the start of their careers risk losing more than $1 million in earnings over a lifetime. Women should negotiate their salary and other perks often throughout their careers, but especially at the beginning, as those early negotiations will yield dividends over time. 2. Invest A 2018 study by Merrill Lynch and consulting firm Age Wave found that women are less confident in their ability to manage investments than men are. The same study also found that 41 percent of women report that their biggest financial regret is not investing more. But women’s comparatively lower confidence doesn’t mean they’re actually worse at investing. “Practically every competitive trial of paper trading and stock market games has shown that women make better investors than men,” says financial advisor Jeremy Britton. Investing is an important part of wealth accumulation. Just saving is often not enough; the interest rates on many savings accounts don’t allow wealth to grow fast enough to keep up with inflation.  Whereas the average interest rate for savings accounts is 0.09 percent, the S&P 500 Index has an average annual return rate of 8 percent since 1957. Investing involves more risk, but often also higher rates of return. Britton advises investing in companies where you spend money regularly — for example, your bank, insurance company, or phone service provider.  “Technically it may be seen as ‘inside knowledge,’ but every shopper will know when a product or service deteriorates, and if you feel like taking your money elsewhere,” Britton continues. 3. Plan for healthcare expenses Many women deal with healthcare expenses unique to their gender.  There’s the cost of general reproductive health — including regular tests, birth control, and feminine hygiene products — that one HuffPost writer estimated to be about $15,000 over the course of a woman’s lifetime. Then there’s the cost of maternal care, which has been rising for insured patients: an analysis by researchers at the University of Michigan found that average out-of-pocket spending for maternity care rose 49 percent from 2008 to 2015.  There’s also autoimmune diseases. According to a 2004 study, autoimmune diseases are the most common type of disease in the United States, after cancer and heart disease, and they disproportionately affect women. The study notes that 78 percent of people with autoimmune diseases are women. Even looking at just the retirement years, a study by Fidelity Investments found that women can expect to spend about $15,000 more on healthcare than men — $150,000 in total. These considerations make it extra important for women to plan for foreseeable healthcare expenses — and keep a good emergency fund for unexpected medical expenses. Financial experts generally advise setting aside three to six months’ worth of expenses for an emergency fund.  And Dr. Lacey Book, a serial entrepreneur, encourages women to make use of health savings accounts. A health savings account, or HSA, is a type of account where people can set aside pre-tax money to pay for certain medical expenses. “This allows them to save, take advantage of tax benefits, and have the freedom to choose where you spend your money in regards to your health,” Book points out. A flexible spending account is a similar tax-advantaged account that can be used for certain medical and dental expenses. 4. Save for retirement Women generally live about six to eight years longer than men do, according to the World Health Organization, which means many women’s retirement savings have to last much longer than men’s do. Even women who share income and expenses with a male partner may outlive him and be solely responsible for years more of general living expenses, and potentially long-term care, depending on their health.  One way women can shore up their retirement funds is to consider retiring later than they’d planned to allow more time for their earnings to increase and their retirement funds to accumulate interest. Another is to take full advantage of retirement accounts, including any matching contributions their employer may offer. Funding traditional IRAs and 401(k) plans is especially beneficial because that allows the owner to make use of pre-tax contributions. 5. Repay debt Women hold almost two-thirds of the outstanding student debt in the United States, according to an analysis by the American Association of University Women. And data from FINRA, the Financial Industry Regulatory Authority, shows that women are more likely than men to incur fees for late payments and going over their credit card limits.  The interest women pay on these debts can also be a big factor that holds them back from accumulating wealth. The sooner debt is paid off — especially debt with higher interest rates — the better.  Whichever strategy you use, be sure to make at least the minimum payment on every debt each month so those debts don’t accumulate even more fees and interest. Women who need help paying off debt can look to the best debt relief companies, which offer help with credit counseling, debt management, debt consolidation, and debt settlement.

Guest Post by Allison Kade One of my favorite things about the new year is that it’s an opportunity to reset. This can mean different things to different people: Maybe you want to repair or invest more deeply in your relationships with the people you love. Maybe you want to get healthy. And if you’re like many Americans, maybe you want to refocus on your finances to finally feel more secure about your money in 2022. New year’s resolutions often get a bad rap because so many people can’t stick to their goals, but there’s evidence that we’re doing better than you might expect — in fact, nearly half of those who made financial resolutions in 2019 actually kept them. All of which to say, financial resolutions can be a powerful tool to restart the clock, stop focusing on old mistakes and embark on a fresh financial future. Among financial goals, these three top the list: Save more Pay off debt Spend less At the end of the day, however, they’re all different perspectives on the same core principle: Spending less than you earn. You can save more by spending less, or by earning more. And you can pay off debt by doing either of those things and dedicating the difference to your debts. So really, for many people, the key to mastering new year’s resolutions will come down to acing that equation: Can you spend less than you earn? One way to master this savings equation is to start the year with a financial detox to help you reset some of your negative patterns from the year before. This process can also help you focus on the resolutions you’ve chosen for the future. Here’s how to pull it off. Study your 2021 patterns Dig up your old credit card receipts from the past year, or at least the past three months. What are you spending the most on? Is there anything you’re spending on less than expected? You can either do this audit by hand, or you can use an app such as Mint to group your spending into different categories. Write down your values Ask yourself this question: What matters most to you? Write out a mission statement for you and your family. Do you prize travel and exploration? Do you prize self-enrichment? Do you prize down time relaxing? This will help guide your spending. If you particularly look for travel, then maybe it’s okay that you spend your money on trips. And if you choose to place your money behind nighttime courses, that makes sense if enrichment is a top goal. But if, for example, you say that your main value is relaxing time with the family, is it the best use of time and money to shell out for five different after-school classes for your kids? If you most care about enrichment, does it make sense to spend thousands of dollars on travel if that isn’t a top goal? Now compare your values to the money patterns you’re actually finding in your own life. Are they aligned? If they’re not, what else could you do to align them? Highlight where your values are misaligned with your budget If you determine that you have some line items that are out of whack with your spending goals, write them down so you can work on them going forward. Be specific. Instead of “I’m going to spend less on coffee,” try “I’m going to cut out those mid-afternoon lattes, so I can dedicate that money to a travel fund instead.” The first part, notes exactly where you’re going to cut. The second part is just as vital: What’s the point? Keeping the larger goal in mind can help you keep up the motivation to make sacrifices in the present. After all, that coffee (or Hulu subscription or cocktail or whatever) is pleasurable right now, and there’s nothing wrong with getting it if you can afford it. But if you have to compare this specific purchase to your larger goal — which would you choose? Try a challenge To start your year off right, you might choose to do a spending/savings challenge. There are lots of versions of this, such as saving the dollar amount of the week it is during the year (for example, save $1 in the first week of the year and $52 in the last week, for a total of $1,378). Striking up a challenge can make the whole thing feel like a game, add an element of fun and help you focus on the task at hand (saving $27 because it’s the 27th week, let’s say) rather than fixating too much on a goal that feels weightier than that. Conquer your triggers with an "If/Then" Some experts suggest that framing your resolution as a trigger and an action can make a big difference. Choose an “if” or “when” as your trigger and a “then” to describe the action you’ll take to replace the negative one. For example, if you were trying to resist dessert but found yourself tempted whenever you’re out at a restaurant, you might say, “If the waiter comes over at the end of a meal asking if I want anything else, then I will order a tea.” Similarly, you can anticipate your spending triggers this way. Maybe you tend toward emotional spending, like popping into a store whenever you have a bad day at work. You might try something like: “If I have a stressful day, then I will go home and take a hot shower.” Think about the bigger picture Not everything is about spending and saving, at the end of the day. Once you achieve a stable financial base — like having enough of an emergency cushion that you won’t get in trouble if you run into any unexpected events like a car breakdown — then it’s time to think about your longer-term picture. Especially if you have a family, kids, or anyone who depends on you financially, writing a last will and testament can become important. Many people put off making a will because they don’t have a lot of assets and think they don’t need one. The truth, however, is that you don’t have to be rich to need a will: If you have any “stuff” at all, or even basic financial accounts, you have assets. A will lets you determine who gets what (that chess set from your grandfather — should it go to your sister?). The other really big reason to make a will is if you have kids. A will is an opportunity to designate legal guardians for your children. That’s who would take care of your kids if you were no longer around. Generally speaking, the default is that your children would probably go to their other parent, but what if (heaven forbid) you and the other parent passed away together? If you don’t have a will, then these decisions will be made by the probate court. That often is determined by who the closest living relative is. It doesn’t, however, take into account the fact that your child may have a closer relationship to your cousin than to your brother, or the fact that your cousin has kids and you’d like your child to grow up as their sibling. Your choices in your will are typically still subject to the judgment of the probate court, but a will can help the court understand your preferences and wishes. Generally speaking, guardianship wishes tend to be honored unless there is a specific reason why the appointed guardian is deemed unfit. For specific questions about your situation, speak to a qualified attorney. Starting 2022 off right Your resolutions should be about what matters most to you. That includes money, and also your family and values: How can you be closer to the people you love? How can you prioritize the things you care about? How can you help protect your loved ones in the future? Whatever your passion, here’s to making it happen in 2022. Allison Kade is the editorial director at Fabric, a one-stop shop for families to organize their finances. She has written about money for publications like Bloomberg, Forbes, The Today Show, Business Insider, The Huffington Post, TheStreet, Credit.com, Fox Business News, and The Fiscal Times. In addition, her work has appeared in lifestyle publications like Real Simple, Travel + Leisure, Lifehacker, xoJane, and BoingBoing.

Debt is overwhelming and can keep you from pursuing goals or life dreams. You can take steps to regain control of your finances and get out of debt. The chapters below will help you explore your options and decide which one may be a good fit for you. Chapter 1: Credit Counseling Credit counseling is financial education. You can get help from a personal finance professional with setting a budget and making a plan to pay down debt. Credit counseling is great because it allows to your explore your options and get specific advice for your financial situation. Chapter 2: Debt Management Debt management programs are offered by credit counseling companies. Enrolling in these programs freezes your credit, so you won’t be able to open new accounts. These programs can also simplify your bill paying because you’ll make one monthly payment to the credit counseling company, and they’ll divide it among your creditors. The credit counseling company will also work with your creditors to negotiate interest rates and late fees. You’ll pay a monthly administration fee and a one-time enrollment fee. If you make regular monthly payments, debt management can have a long-term positive effect on your credit. Chapter 3: Debt Consolidation Debt consolidation means taking on a new loan to immediately pay off your current debts. You’ll need to make regular payments on your new loan to get out of debt and build your credit. Ideally, you’ll want to find a loan that has a lower interest rate than your current loans. However, it can be difficult to qualify for a new loan and good interest rates if your credit score is low. If you have a lower amount of credit card debt, you can try a balance transfer instead of taking on a personal loan. This is only advantageous if you can pay the bulk of your existing balance off during the zero interest promotional period. Debt consolidation is a good way to take on your debt if you’re committed to making monthly payments. It ultimately helps your credit. Chapter 4: Debt Settlement Debt settlement allows you to settle your debts for less than what you owe. However, you may have to stop making any payment on your debts to help incentivize settlements. This will have a negative effect on your credit. Settled debts will be marked as settled on your credit report. Some creditors may not accept settlements. However, debt settlement can be an effective strategy to get out of debt if you’re overwhelmed. Chapter 5: Bankruptcy Bankruptcy is often viewed as a last resort in debt relief. However, it can be beneficial because it quickly resets your finances. Declaring bankruptcy is a legal process that discharges some kinds of debt. Once debt has been legally discharged, you are no longer legally obligated to pay it. Bankruptcy also helps protect some of your assets so that you still have the things you need to work and live. Keep in mind that your definition of need may be different from the court trustee’s definition. Bankruptcy stays on your credit report for seven to ten years and can have a negative effect on your credit score. If you're considering filing for bankruptcy, work with a lawyer with that specialty. They can ensure that everything is done correctly and avoid legal pitfalls.

This is Chapter 5 of 5 in our Ultimate Guide to Debt Relief series. Bankruptcy is a legal process and a formal acknowledgement that you cannot repay your debts. You may find it intimidating. However, bankruptcy is a good option to consider, helps protect your assets, and helps you quickly move on with your life once the process is complete. Because laws can be complex and intricate, this guide focuses on general information you should know about how bankruptcy works and the best way to approach it before deciding to file. What is bankruptcy? How does bankruptcy affect your credit? When is it a good idea to file for bankruptcy? What happens when you file for bankruptcy? How do you file for bankruptcy? What is bankruptcy? Bankruptcy is a legal process that allows you to hit reset on your finances if your debts are beyond what you can pay. A trustee or judge reviews all of your finances to determine whether or not to discharge the debts, which means that creditors can no longer collect. Creditors cannot take any action to collect once you’ve started the bankruptcy process without first seeking and getting permission from the judge. Bankruptcy does not discharge all of kinds of debt. Alimony and child support are not dischargable. In most cases, income taxes overdue less than three years and student loans are also not dischargable. Meeting with a bankruptcy lawyer to review your situation can help you understand which debts can be discharged and which ones can’t. You can file bankruptcy as an individual, maried couple, or business. There is even a process for filing bankruptcy if you have debts internationally. The two main kinds of bankruptcy for individuals are Chapter 7 and Chapter 13. Chapter 7 bankruptcy fully discharges eligible debt while protecting your assets. Chapter 7 bankruptcy typically protects all of your assets. Chapter 13 bankruptcy also helps protect your assets, but it doesn’t fully discharge your debt. Instead, Chapter 13 bankruptcy reorganizes your debt and creates a payment plan that lasts up to five years. “In Chapter 13, clients can reduce the amount owed on secured loans, reduce interest rates, reamortize loans, remove certain liens, extend the time to pay back taxes, reduce the amount owed on unsecured loans sometimes down to zero, and legally break leases,” says Dai Rosenblum, attorney and counselor of law. To get the best outcome, it’s wise to work with a lawyer with Chapter 13 expertise and experience. “You need a Chapter 13 specialist. If that lawyer does things correctly, you end up with a confirmable plan that the creditors are stuck with. There is no negotiating,” he adds. Depending on your situation, you may have to file a Chapter 13 bankruptcy. Otherwise, Chapter 7 is the ideal. “As a general rule, you prefer to do a Chapter 7. That eliminates all of your debt, and is completed, start to finish, in a few months. You do a reorganization plan because you need to, not because you want to,” says Rosenblum. While bankruptcy is an effective way to reset your finances and start over, it does have long-term effects on your credit. Back to List How does bankruptcy affect your credit? Bankruptcy stays on your credit report for seven to ten years, so it can make it difficult to qualify for low interest rates, new loans, and credit cards. But, it’s not all bad news. Bankruptcy can have a positive effect on your overall credit, too. “One surprising thing about bankruptcy is that it can improve your credit. All the debt that was formerly on your credit report is reduced to zero. Your credit ratio drastically improves, even though your credit score goes down. That shows a potential new lender that it will be easier to make future loan payments,” says Rosenblum. However, even though bankruptcy can lower your credit score and stays on your credit report for seven to ten years, bankruptcy can be a wise choice if you really need a reset on your finances. Back to List When is it a good idea to file for bankruptcy? If your debt has become overwhelming and impossible to pay, bankruptcy is worth considering because it can protect you from creditors. Consulting with a bankruptcy lawyer to learn more about how bankruptcy can help you understand it more and determine if it’s a good fit for you. “Without legal advice, many take assets that are completely exempt, such as 401(k)'s, and pay on debt that they don't have to. Most consumer bankruptcy lawyers offer a free first consultation, so there is no downside to gaining knowledge about how best to deal with debt. You shouldn't go to a credit negotiating company. They generally charge more than a lawyer does and reduce the amount of debt less than a bankruptcy does,” advises Rosenblum. Back to List What happens when you file for bankruptcy? Before you file for bankruptcy, you will be required to take a credit counseling course to help you determine if bankruptcy really is the best choice for you. Once you file for bankruptcy, you’ll have a meeting with your trustee. Your creditors can attend to ask for more information on your financial situation. Rosenblum offers more insight: “You attend a Creditors Meeting, which is conducted by a lawyer appointed as the court trustee. There is no judge and no courtroom. It is rare for creditors to be there. What rational business would pay to send someone to a meeting where they can't get anything out of it? You get a document called a 'Discharge Order' in the mail. With rare exceptions, that's the entire process,” he says. Once the judge determines which debts to discharge, you’ll no longer be legally required to pay those debts. Back to List How do you file for bankruptcy? While you can represent yourself when filing for bankruptcy, it’s a good idea to work with a lawyer. The judge and the court trustee must remain impartial and cannot help you if you represent yourself. A lawyer can help you avoid pitfalls and help you get a good outcome. Lawyers can be expensive. If you have a hard time stretching your budget to pay for one, you can find resources available to help or get free legal counsel. Depending on which kind of bankruptcy you’re filing, you may have the option to represent yourself. However, that may not result in the best outcome for you. “If you qualify for a Chapter 7, you can be your own lawyer, but there many traps for the unwary, and it is a bad idea. Even lawyers who are not bankruptcy specialists would probably not be able to get a confirmable Chapter 13 plan if they represent themselves. The list all of the things to look out for would be book length,” says Rosenblum. As you’re choosing an attorney, you’ll want to find one who specializes in bankruptcy law. “Bankruptcy law is complicated and unlike any other area of law. Lawyers should not dabble in bankruptcy,” says Rosenblum. Understanding what bankruptcy is and how it works will help you be more confident when seeking professional help with your debts and empower you to take control of your finances.