Since the economy took a dive, many people have suffered job loss, reduced hours, and reduction of benefits. As of December, 2011 there were 13.1 million unemployed persons in the United States. Even those who haven’t taken a hit directly to the wallet are nervous of what the future might bring.

Most are looking for ways to bank more cash in case of emergencies, pay off high-interest credit card bills, and get out of debt as quickly as possible. In many cases, though, they just need to figure out a way to get grocery money this week, rather than looking at the long term.

That means figuring out something fast, such as finding the nearest credit cards application and filling it out. In other cases, it means talking to debt management companies.

How does debt management work?

Debt management companies often appeal to desperately indebted people by promising to get rid of their debt quickly and easily. They often promote their services as being beneficial to consumers’ credit scores, and advertise that they can settle debts for pennies on the dollar.

This has caught on; the U.S. Treasury estimates that debt management programs have increased by nearly 300% in the past five years.

Unfortunately, there is no quick and easy way to get out of debt, and debt settlement can negatively affect your credit. While debt management companies can be helpful when it comes to negotiating, they also put consumers at risk.

Many debt settlement agencies require customers to place large amounts of cash in unsecured accounts. The deposits are used to pay off the customer’s bills, but the money is usually not held in the customer’s name.

Consumer protections

In fact, the FTC has received so many complaints and logged so many lawsuits, it has implemented rules that bar debt relief organizations from over-promising results. The rules also require them to warn consumers about the negative effects of debt settlement.

The truth is, just about everything a debt relief company can do for you, you could do yourself for free. You can call up your creditors, let them know you are having financial hardship, and see if they’d be willing to negotiate on your interest rate. They could turn you down, but a debt settlement agent isn’t likely to get much better results than a consumer who is tackling their debts head-on.

There are alternatives to debt settlement you should investigate before deciding.

• The FTC has posted a consumer fact sheet on how to help yourself get out of debt. It also has information about credit repair companies and how to get help if you’ve been scammed.
• If you have good to fair credit now (a credit score of 640 or above), but you’re worried about your high debt load and climbing interest rates, you can apply online for a credit card balance transfer to pay off your debts faster, with lower interest rates.
• You may also be able to consolidate your high-interest credit card debts into a debt consolidation loan, home equity loan, or other bank loan. The fixed payments will ensure you pay your debts off quickly, with less risk.

There are many quality credit-counseling companies out there, both for-profit and non-profit organizations that help people learn how to manage their credit. Always research a company before doing business with them, and learn as much as you can about credit repair before you begin.

Incoming search terms:

• bloomingdakes card apply havent get reply for a week