 TITLE: What Is the Best Way to Get Out of Debt? CONTENT: 5\\. Consider Getting Help With Your Debt\n----------------------------------------\nIf your financial situation is dire and you don't see a way out with some of the other steps we've covered, it may be worth seeking help. Credit counseling agencies and debt settlement companies may be able to assist you. Here's how they work and what to know about each.\n### Credit Counseling\nA credit counselor can help you by setting up a debt-management plan. With this plan, you make one monthly payment to the credit counseling agency, and it divvies it up into separate payments to your creditors.\nOne of the benefits of this option is that a credit counseling agency can negotiate lower interest rates with your creditors, which can potentially reduce how much you pay each month and save you money on interest.\nAlso, you're continuing to pay your bills on time, so you shouldn't expect a drop in your credit scores. However, you won't be able to apply for new credit while you're on the plan, which can take several years, depending on how much you owe. Also, you may be required to close your credit card accounts, so you don't accrue new debt while you're making payments, which can potentially hurt your credit score.\nIt's worth considering a debt-management plan if you're mostly current on payments, but your credit isn't good enough for debt consolidation.\n### Debt Settlement\nThe objective of this approach is to settle for less than what you owe. You may have a hard time doing this on your own, so you'll likely need to enlist the help of a debt-settlement company. Because of the damage it can do to your credit, debt settlement should be used only as a last resort.\nInstead of creating a repayment plan as with a credit counselor, debt-settlement companies have you stop making payments to your creditors. Instead, you'll make a monthly payment into an account with the company, which it eventually uses to settle once the balance is high enough.\nDebt settlement can potentially save you money in the short term because you're paying less than what you originally owed. But it can be much more expensive in the long run.\nFor starters, you may be on the hook to pay taxes on the amount of debt that was forgiven. Also, because you stopped making payments and paid less than the agreed-upon amount, debt settlement can wreck your credit, making it difficult to get approved for credit in the future. Even if you do, you can expect higher interest rates until your credit history recovers.\nIn general, debt settlement is worth considering only if you're already behind on payments, and you have no other options. END