Debt relief programs are designed to help people or businesses who are stuck in debt with no relief in sight. They offer credit card relief through negotiation and settlement with your creditors and can often get your debt reduced by 50% or more.

Pro and cons for some of the debt relief programs; Debt settlement versus debt consolidation.

Debt Settlement: Pros and Cons

Debt settlement is negotiating with creditors to settle a debt for less than what is owed. This method is most often used to settle a substantial debt with a single creditor, but can be used to deal with multiple creditors.

The prospect of paying less than you owe — far less in some cases — makes debt settlement an enticing choice for eliminating debt.

Pros:

It may reduce your total debt drastically per month an amount you can afford to use to fund settlements.

It provides flexible payment arrangements (changes can be made if needed).

It provides an attractive alternative to bankruptcy Settlements typically completed in 3-5 years

Cons:

Credit profile will be negatively impacted. Debt is not repaid in full. Creditors are not required to accept settlement offers. Debt balances are likely to increase (i.e. late fees, interest) while settlements are being negotiated. Collection activity will escalate it. Typically takes 6 or more months before the first settlement occurs. You may be taxed on the portion of the debt you don’t pay back.

Debt consolidation: Pros and Cons

Pros:

With ease of access to funds, and effortless management of your balance, a balance transfer card becomes the first choice for many looking for elbow room in a loan. Introductory rates are a top reason for picking the balance transfer option. Just make sure that you pay off the debt before the period is over. Frequent Flyer rewards and other discounts can tempt many to choose credit card consolidation

Cons:

Unlimited debt: Lenders can be very proactive with increasing your limits, allowing yourself to dig further into debt.

No repayment schedule: Card holders who only repay the minimum requirement can take years to pay off small loans.

Premium rates: Many balance transfers may revert to high rates after the introductory period.

Business loans under debt consolidation

Pros:

Regular repayments allow borrowers to predict when their debt would be paid off.A debt ceiling stops your debt from increasing if you ever get the urge to buy more on credit. Fixed personal loans may offer lower rates when you have committed to paying off your debt over a set period.

Cons:

Inflexibility: The terms of the loan are often set, and redraw options may not be available.

Applications: These fees and missed repayment fees can cost you hundreds if you’re not careful.

Many times, when it seems you have so much debt that it threatens to reduce you to bankruptcy, you can resort to debt relief programs. Debt consolidation or debt settlement can conceivably help you dig out of debt.