I’m not sure if this program is the one I really want to work with or not. I searched for ‘American Debt Relief’ reviews without success, but I did like what they had to say. This company is run by lawyers, not some guy working out of a boiler room in a call center. They don’t try to promise that they’ll negotiate your debt with your creditors. Instead, they offer to guide you through bankruptcy. Now I know what you’re thinking: bankruptcy is not for me. Either you believe there is still a stigma attached to it, or, like many Americans, you feel (justly I think) that you should pay the debts you incurred. Or maybe you believe you’d lose your home or car if you declare bankruptcy. Whatever the case may be, let me offer you some basic information about bankruptcy:

• It is not a legal way to cheat. Bankruptcy has serious consequences. It stays on your credit record for ten years. It will affect your credit for years after you finish the proceedings. In addition, your bank figured in the possibility of you declaring bankruptcy when they gave you a loan. They understand that sometimes debts can become overwhelming and that the only way to get out is a clean slate. While they may not like it, they accept it as part of doing business.

• Bankruptcy does not have the stigma it once did. It used to be that admitting you were gay, admitting to having had an affair and admitting to having declared bankruptcy were three of the worst taboos in American culture. These days, gay couples adopt children and can marry in several states, adultery is understood as something that may happen but that couples get through and move on from and Bankruptcy? Bankruptcy is something that you did because you had a problem and needed to find a way to get past it. It’s not the end of the world and people understand, especially with the terrible economy that you may need to do it in order to make it through tough times.

• It doesn’t have to mean dropping all your debts. Bankruptcy can also include arranging a payment plan for your debts, similar to a debt consolidation program, but in this case, the courts will force the bank and your other creditors to accept a compromise. You can then go in with a clear conscience, knowing you paid your debts in good faith, but also getting the clean start you desperately need.

These are all creditors, whether it’s the bank, the electric company or the local newspaper, they all want one thing from you: money. There’s just one tiny little wrinkle: You don’t have enough to give them. With near 10% unemployment and hundreds of thousands more underemployed (i.e. working for fewer hours than they want to, or working for far less than they need in order to make an adequate living), more and more of us are falling behind on our debts. However, there is a solution to the nightmare. It’s called a debt management consultant. So what do debt management consultants do?

If you get yourself a reliable debt management consultant, they will do a variety of things to help you with your debt:

• Help you manage your money better. The first thing that a debt management consult should do for you is to help you make and stick to a realistic budget. You lost your job and you’re living on various part time wages? Yeah, it’s tough, but there are solutions to every problem. You’ll need to adjust your lifestyle, but it can be done and your debt management consultant will help you do it.

• Negotiate with your creditors. No, they will not get your debt settled for 35 cents on the dollar. And by the way, if they do tell you they can do that, run like hell – you’ve found yourself a con man. However, they can help you craft a strategy together with your creditors to lower your monthly payments, usually through lower interest rates so that you can try to catch up.

• Counsel you on managing your debt in the future. A quality debt management consultant will help you to manage your debt not only now, but in the future. They will do that by showing you when it pays to use your credit cards and when you’re better off paying cash (hint: buying your groceries on credit is a big no no. That will only sink you deeper and deeper into debt since they’re gone and consumed long before you pay for them).

Well, let’s assume you’re like the typical American and you have around 6 credit cards, each one of them closing in on the maximum. In total, you may owe around $8,000 on all of them. You likely have no savings or very little savings and just before the whole credit crisis hit, maybe you decided to refinance the house in order to put in a pool, or a new bathroom. Or maybe you had decided that the rising value of your home meant you could take finally that trip to Rome that you’d always dreamed of. Whatever the case may be, today, you’re drowning in debt and you may be unemployed or if you are employed, you may be making significantly less than you need to be earning because your company forced everyone onto a four day work week or to take a 10% pay cut. Hey, you’ve still got a job right? Well, if you’re in that situation, you may be a candidate for a debt relief clearinghouse.

What these places will do is to contact all your credit cards on your behalf and negotiate a deal for you. They may be able to get lower interest rates for you and they may even be able to get the credit card companies to settle for less than the full amount you owe. Especially in this economy, the credit card companies are eager to work with such places so that they can get something rather than seeing a debtor walk away and not pay anything. However, you need to be sure to pick a debt relief clearinghouse which will actually do the job and not just walk away with your money. Here’s a few tips on how to do that:

• Look for companies with a history. A successful company will have been in business for years and will be able to prove it.
• Check with the Better Business Bureau. If the company you want to work with has scammed others, odds are that they’ve been reported.
• Be prepared to walk away. If the company is just eager to get you to fork over your cash, then walk away. A legitimate company will take the time to tell you exactly how it works, will have literature for you to study and will not pressure you to sign right now. And on that same vein. . .
• Beware of incredible claims. If the company you’re working with is trying to claim that they can get you a deal where you’ll pay just 35 cents on the dollar, run the other way. While it’s nice to believe that such a thing could actually happen, the reality is that most credit card companies do not want to settle for so little and it’s highly unlikely that the debt relief clearinghouse can get you such a great deal.
• Keep your wits about you. If it smells fishy, just walk away. There are enough legitimate places to work with that you don’t have to work with them even if they were recommended.

If you’ve followed the news, you’re probably aware that money is tight these days. The banks don’t want to lend to anyone who has bad credit, but those are precisely the people who need to find a way to refinance their loans. There are some places that will refinance for you, but the terms are sometimes confusing and sometimes seem like they might not be a very good deal. So what should you take into account if you need to refinance with bad credit?

• Ask a lot of questions. Do not be afraid to ask questions from the loan officer you are talking to. Many of these people are fast talkers who are paid to get you to sign the papers as quickly as possible. Therefore, it is your job to hold back and not make any rash decisions. No matter how bad your situation is now, it could get even worse if you sign a bad deal.

• Take the time to think it through. It sounds tempting that you’ll reduce your monthly mortgage payments by $200. But remember that doing it will ultimately cost you thousands of dollars more since you’re creating a new loan with longer terms and paying more fees. This might be a good deal, especially if it means that you can stay in your home. However, you need to ensure that you will be able to afford that new payment and to decide if it’s worth adding thousands of dollars to your expenses.

• Talk to a lawyer. Most people want to believe they can understand the documents themselves. However, you need to speak to a lawyer who understands these things and who works for you to make sure you didn’t miss something. Even though it will add to your expenses, ultimately, you’ll be happier if you do it and your bad credit finance loan will not feel like such a burden if you understand what you’re getting into.

• Credit Counseling

This has become all the rage today, with thousands of companies vying for your eyeballs and trying to offer you the chance to negotiate away your debts. This does work, but usually not the way the slimier ones will claim. The reality is that you can get discounts on your debts. I was offered to settle my debt for as little as 65 cents on the dollar by one of my credit cards. More typical was to lob off the accrued late fees in exchange for a lump sum payment. If you have the money to pay off your debts, but not to make all those interest payments, this may be a way to go. Find a reputable company to work with and they can help you to do the negotiations. Be aware that this will still hurt your credit. Your accounts will be listed as closed and settled. In some cases, they may also list that it was settled for less than the full amount owed. However, not settling your debt at all is far worse.

• Bankruptcy Chapter 13

No, it’s not a book about someone going bankrupt. Rather, the law that allows people to declare bankruptcy has several sections, called chapters. Chapter 7 means settling for less than you owe. It’s similar to the credit counseling option, except that this is administered by a court so the creditors have to follow what the judge says. The first option (counseling) is all voluntary on both sides. These days, this is the most common kind of Bankruptcy. The good news is that bankruptcy isn’t what it once was. It is no longer a terrible stigma to go bankrupt and in fact, it may be a good thing in the long run, because it says to people, I had problems, but I dealt with them and now I’m moving on with my life.

• Bankruptcy Chapter 7

Just like Chapter 13, this is another part of the bankruptcy code. This is the one I followed. Basically, the idea here is to get a chance at a clean slate. You will not owe any debts once this is done, however you will be required to “liquidate” anything that is non-essential. If you own a home, it may be put up for sale. If you own a car, ditto for that. There are exemptions based on where you live (For example, some states will let you keep your home if that is where you live. Sometimes you can keep the car if you can prove that it’s necessary for work). This debt relief solution is only available however when you have exhausted other options. You will have to prove to the judge that you tried debt counseling and that only a clean slate will allow you to get out from under your debts.

In order to make the best decisions on what debt relief solution you should choose, it’s best to speak to a qualified bankruptcy attorney who can advise you on your options.

Let’s first talk about a bit about what these kinds of places do. In essence, the way a debt consolidation service would work is that they take all your bills, combine them into one lower payment and then help you get out of debt by allowing you to pay just one payment to them instead of dozens of payments to every creditor you have. There are thousands of companies all over the United States offering such services. Some are legitimate and some are not. But how can you tell the difference between them? What sets the real guys apart from the fakes in the world of debt consolidation? And what does any of this have to do with Christian debt solutions?

Basically, a legitimate company will have their information displayed clearly, with correct spelling on their home page and they will answer any questions you have. They will tell you how long they’ve been in business, they will meet with you in person and they will be realistic in their estimates of what they can do for you. That last is especially important since so many people who are drowning in debt see only the dollar signs and the relief that they are promised. However, in order for you to get relief, it means your creditors will have to take a loss. Typically, you can expect to get your creditors to settle for around 70 to 80 cents on the dollar or a little better if you’re able to pay most or all of your debt at one time. I have seen cases where people were able to settle for as little as 40 to 50 cents on the dollar, but those are extremely rare.

In essence, what some unscrupulous people are doing is to try to pull you in using your religious beliefs. One place I saw who claimed they were a “Christian run” debt consolidator and said they could get your debt settled for as little as 35 to 60 cents on the dollar. Of course they managed to rush to write that and misspelled 35 as 305. They also had other misspellings in their text and looked incredibly fishy. A further hunt turned up dozens of people complaining of scams by the place and saying how they were bilked out of hundreds and even thousands of dollars, having trusted them because they thought they were religious people doing God’s work.

So how can you protect yourself? Follow these simple guidelines:

• Look for a place that has been in business for a while.
• Be realistic. Don’t expect them to settle for next to nothing.
• Check them out. Ask friends about them and check the Internet for scam warnings.
• Check with the Better Business Bureau if they’ve had complaints filed.
• If you specifically want a Christian debt solution service, speak to your priest or minister and get recommendations from him or her. That’s your best bet by far to find someone reputable.