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Washington consumers should be careful of debt relief scams

Financial circumstances such as job loss or a disability can cause people to be overwhelmed with debt. When debt keeps on piling up, it's no wonder many Washington consumers wish to pursue debt relief. While clearing up debt alleviates stress, it's wise to be careful of possible debt relief scams. There are reliable options available for those who are in debt.

Debt consolidation combines high-interest debt into one monthly payment. Often, the monthly payment comes with lower interest rates. This may be a suitable option for those who are able to obtain funds such as a personal loan or home equity line of credit. However, it's important to be mindful that if a consumer is unable to pay back the loan on a home equity, they stand a substantial risk of losing their home. For those who just need help with managing their finances, credit counseling may be the way to go.

With credit counseling, debtors are guided by a counselor who creates a plan to help pay off outstanding debts. Also, this can help consumers develop future budgeting plans. It's recommended that consumers contact the National Foundation for Credit Counseling to locate a reputable agency since many companies try to steer individuals in the direction of a credit repair agency.

It is recommended that consumers stay far away from debt settlement companies who promise to settle debts with original creditors. In many instances, these companies charge high fees that are never paid to the creditors, further damaging the individual's credit score. For debt that cannot be cured through debt consolidation or credit counseling, bankruptcy is a debt relief option available. This can be an efficient way for Washington consumers to discharge all unsecured debts and get on the road to financial freedom.

Source: Chicago Tribune, Beware debt relief scams, Anya Kamenetz, Jan. 28, 2014

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