6 Steps to Make Debt Relief Programs Work for You

It takes a lot of strength and commitment to dig yourself out of debt, but luckily, there are tools that can help.

Debt relief, also known as debt settlement, is an attractive option to many people, given its potential to slash what you owe. When you sign up with a debt relief company, you’ll work on saving up money for settlement offers. Then, the debt relief company will act as a go-between for you and your creditors to negotiate a deal where you’ll be relieved from the debt after paying a smaller agreed-upon sum.

It’s possible to save a lot of money this way — if you can stick with the program. Industry data shows that around 40% of customers actually drop out before they get the full benefits of the program. Here’s how to make sure you get the most out of debt relief.

1. Make sure it’s the right choice

You wouldn’t use a toothpick to dig yourself out of a pit, nor a mallet. You’d use a shovel, the exact right tool for the job.

The same is true of your debt, too. Credit card debt relief isn’t right for everyone, particularly if you’re able to continue making payments (albeit modified) on your debt or if you’re trying to preserve your credit score. That’s why you should thoroughly research other common debt help options and strategies, too. These include:

• Using the debt avalanche and debt snowball methods to pay down debt quicker
• Taking out a debt consolidation loan
• Asking your lender for forbearance or payment modification plans
• Negotiating directly with creditors yourself
• Speaking with a non-profit credit counselor and/or signing up for a debt management plan
• Filing for bankruptcy

Knowing your choices is the only way you can make an informed decision about whether debt relief is the right choice for you.

2. Understand the process

It’s equally important to know the ins and outs of how debt relief works in general. Here’s a brief rundown of the process:

• Sign up with a debt relief company: You’ll sign a contract and make monthly deposits into a program savings account to save up money for settlements. If you haven’t already, you may choose to stop paying your creditors. Note that companies cannot require that you stop paying your bills, but they will recommend that you do as it helps build up leverage to negotiate.

• Save up for settlement offers: You’ll continue saving up in the program account, which typically carries a fee of $5 to $10 per month. You have access to this money and can withdraw it if you leave the program. As you continue to not make payments on your debts, you may be hit with late fees, penalty interest and lawsuit threats from your creditors until you’ve settled your debts. Delinquency can also hurt your credit score.

• Review and approve settlement offers: The debt relief company will try and negotiate a settlement when you’ve saved enough money. When they come to an agreement with a creditor, you’ll get the chance to approve or decline the offer. This continues until all of your debts are settled or your creditors refuse to negotiate.

Although many people considering debt settlement are overwhelmed and stressed about getting some relief, it’s important to take the time to research a company before you enroll with them. Consider online reviews and come to the consultation call with questions ready. The best debt relief companies should offer transparent pricing, a clear overview of the process and individualized estimates about how long it will take to get settlements and how much you may be able to save.

According to industry reps, most people will see their first settlement offer within four months, for example, but some companies may be able to deliver results earlier.

3. Build strong financial habits

You can propel yourself even faster along the debt relief track by focusing on building a solid skill set when it comes to managing your personal finances. Use this time to learn about and tinker around with different strategies for things like:

• Budgeting
• Avoiding credit card debt
• Saving up for emergencies
• Saving up for long-term goals like retirement
• Saving up for short-term goals like holidays and vacation
• Paying down debt that you can’t enroll in a debt relief plan, like auto and student loans

If you have a solid emergency fund underneath you, for example, it’ll be easier to deal with financial setbacks that might otherwise have caused you to drop out of the program or avoid falling back into debt in the future. Saving money is rarely easy, but it can be especially challenging when you’re already trying to pay down debt. Keep reminding yourself that every little bit helps. If building up an emergency fund equal to three to six months’ worth of your living expenses sounds discouraging, start with a more attainable goal – say, $1,000 or one month of expenses – and then build from there.

4. Keep up with your program deposits

Your debt relief company can’t do its work if they don’t have a carrot to dangle in front of creditors. You can help them help you by making sure your program deposits are always on time and for the recommended amount.

Sometimes it might seem easier to let these payments slide, since they’re not official debt payments. But remember that the faster you save up the recommended amount, the quicker you’ll see results, with less chance of being knocked off-track by inevitable life events.

5. Double-check automatic payments and subscriptions

A key part of debt relief programs is stopping payments on your debt while your hired negotiators work on a settlement. If you keep using your enrolled credit cards to make new charges, it’ll be harder to do that. That’s why you’ll be advised to stop using your credit card to buy things.

But it’s easy to forget about other automatic charges, too, such as subscription fees and auto renewal charges. If you spend some time combing through your credit card statements, you can spot these charges before they hit your credit cards anew and prevent any issues going forward.

The same thing is true of autopay, which you might have signed up for to keep up with payments on debts that are now enrolled in the program. So, just as you check your credit card statement for recurring charges, check your bank statement, too, to make sure you’re not forgetting about canceling any ongoing debt payments as well.

6. Be responsive and patient

Debt relief programs take time, and it’s important to have patience to stay the course. It can take anywhere from two to four years for the entire process.

It’s also important to keep in touch with your debt relief company. If you’ll be unavailable for a little while, let your debt relief company know ahead of time. That way, they won’t try to contact you with something important and time-sensitive, like a potential creditor settlement you need to approve. In general, you want to respond to settlement offers as quickly as you’re able, so the company can close out that account and move on to working on the next.

Staying in touch with your debt relief company is also especially important if something changes with your debt. If you receive a lawsuit notice, for example, or if your debt is sold to another company, it’s important to keep your debt relief company apprised of any changes. That way, they can do their work more effectively and help you move toward your ultimate goal of becoming debt-free — for good.

More from Money:

5 Must-Ask Questions Before Signing Up for Debt Relief

Credit Counseling vs. Debt Relief: Which Is Right for You

5 Things People Get Wrong About Debt Relief