If you listen to the ads on TV, getting out of debt is easy. All you need to do is make one phone call and immediately get rid of 40-60% of your debt.

Of course, getting out of debt is not really that easy. Sure, there are ways to eliminate large chunks of debt. In fact, debt settlement (in which you negotiate with your creditors to pay your debt off for less than you owe, which is where the 40-60% savings comes from) is a great alternative to bankruptcy. But it’s not a good solution for everyone. It has some drawbacks. And it definitely isn’t an easy way to get out of debt.

But are the companies you see on TV a scam?

No. Many of them are legitimate companies, offering a real service that can help you get out of debt. Some of them are scams. But in a lot of cases the reason people are unhappy is that the service did not solve their problem. Not necessarily that the debt relief company ripped them off. So, if you decide to get help, you first need to do your research and check out the company before you sign on the dotted line (and especially before you send in any money) to make sure they have a good customer service record. And then you need to make sure you choose the right kind of service for your type of financial problems. Otherwise you might end up very unhappy.

Basically, there are three types of debt relief programs that can help you reduce your credit card debt:

Credit counseling.

Credit counseling is very popular. Years ago you would meet with your local credit counseling agency, and they would help you work out a budget so make the most of your money. Now it can all be done online and over the phone. After the initial discussion, then they contact the banks holding your credit cards and work out a plan to lower your interest rate, and consolidate your payments into one single payment. Together, this means more of your money goes towards the balance and you will get out of debt faster and save lots in interest. When most people see one of the ads on TV, this is what they think they are signing up for. But this is a more conservative option, and you don’t save 40-60% (that’s debt settlement, see below).

Debt consolidation loan.

If you own a home, then you can use the equity to take out a loan. You can then use this loan to pay off your credit card bills, consolidate them into one payment, and lower your interest. If you don’t then you can try to do the same with a personal loan, but your interest rate won’t be nearly as low as with a home equity loan. The risk with a home equity loan is that if you ever find yourself in a situation where you cannot pay the loan, you risk losing your home. So think carefully before using this option.

Debt settlement.

Debt settlement has become very popular in the last few years. It is very appealing to think that you can pay off your credit card bills and save 50% or even more. And it does work. But you need to be careful because not all the ads make it very clear that you are signing up for a settlement service. And while it sounds good to save 40-60-%, it only works if you are behind in your payments. Otherwise, why would the banks take less if you are paying on time? So if you are not behind you must stop paying. And then the calls start coming. And then you might end up in collections. If you are on the verge of bankruptcy, then getting calls from debt collectors isn’t so bad. But if you have “perfect credit” and don’t realize the company is leading you down this path, then you’ll be in for a big (bad) surprise. So just make sure you know what you are getting yourself into.

If things are real bad then you can consider filing for bankruptcy. But it is definitely a good idea to consult with an attorney first.

As you read through each of these options, they all should seem pretty clear. The problem is that when you see the ads on TV, some of these companies combine the best aspects of each into some type of “miracle debt relief”. But there are not miracles when it comes to getting out of debt. Well, if you win the lottery then that could be probably be considered a miracle, I guess. However, you can’t plan for winning the lottery. You can plan for the other options. Just make sure you know which one you are signing up for when it comes time to make your decision. There’s no better feeling than getting out of debt. And there’s no worse feeling than getting ripped off. So make sure to check out the company behind the ad and you’ll end up on the happy side!

Kris Bickell experienced the pain of credit card debt first hand. He shares the tips he learned on his website Debt-Tips.com, which offers helpful tips for dealing with debt, credit, and other money problems.