Consumer debt advocates offer financial guidance to those whose debt has become too difficult to manage themselves. In most cases, consumers hire a company to talk to creditors for them in order to hopefully negotiate lower payments. The downside is that this typically lowers the credit score somewhat since it is considered a debt relief program, though of course the impact is not as severe as filing bankruptcy would be. Additionally, there is a fee associated with this type of service. Thus, consumer debt advocates are usually helpful for those whose unmanageable debt has them considering bankruptcy, not consumers who simply want lower payments despite still being able to afford to pay their bills.
Participating in a debt relief program usually requires consumers to sign a power of attorney so that consumer debt advocates can begin talking to creditors on behalf of the client. The goal is to arrange lower payments so that the debtor can become current on his bills, putting an end to constant phone calls from creditors trying to collect money. Most creditors are anxious to begin getting at least a portion of the money owed to them, which is why they are likely to agree to lower payments. Of course, it often takes some time for the consumer debt advocates and creditors to come to an agreement that benefits both parties.
One of the goals of consumers participating in a debt relief program is to stop phone calls from collectors, as some people get several a day, forcing them to screen their calls to avoid questions and threats from creditors. Unfortunately, the phone calls do not usually stop right after contacting a relief program, as most creditors will not stop calling until payments are being made. Additionally, not all creditors will agree to reduced payments, which means that contacting consumer debt advocates is not always a perfect way to get out of debt.
Getting help from consumer debt advocates costs money, including both upfront and monthly fees. For example, there is usually an account setup fee to start the process, and a percentage of the monthly payments to creditors will also be charged. Also, it should be noted that if the debt advocates are able to negotiate lower payments, a percentage of the amount it was reduced by will be owed to them. The credit score may also be affected negatively in the short term, when using the help of consumer debt advocates, though of course it should eventually improve once most of the debt is paid off. In general, this type of service is usually ideal for those in danger of bankruptcy, not those who are just late on a few bills.