DIY Vs. Professional Debt Relief: Which Should You Choose?

When you’re ready to get out of debt, you can either go it alone or work with a professional debt relief company. The decision is personal and strategic — and it depends on the kind of debt you owe. But whether you choose DIY debt relief or seek professional help, you’ll need to be prepared for a long process.

DIY debt relief

Going about your debt relief journey on your own without a professional is considered DIY debt relief. To do this, you’ll first organize your debt into one comprehensive list so that you can see how much you owe and what types of debt you have. Include credit cards, student loans, personal loans, auto loans, medical debt and mortgages. Even the smallest debts should be part of your list. 

From there, you may decide to reach out to your creditors on your own behalf. You can ask them about lowering your interest rate, setting up a payment plan or starting a conversation about how you can settle your debt for less than you owe. Keep in mind that debt settlement may not be available to you right when you ask, and you may need to come back to this more than once.

Finally, you’ll decide which debt to pay off first. To do this, you’ll consider high versus low interest debt, such as credit cards versus student loans, and which debt payoff strategy you’d like to use to pay it off, such as the debt snowball method or the debt avalanche method.

Pros

• Saves money. Depending on the company, you will need to pay a fee for each debt settled along with a monthly maintenance fee. When you handle your own debt relief, you can avoid these additional costs.
• Gives you more control. By communicating directly with your creditors, you can decide what the best plan is for paying off your debt. You can also make changes to the plan if necessary without having to wait for a response from your debt relief company.

Cons

• Requires more effort. Since you’ll be on your own, it’s up to you to negotiate and keep track of everything — including denials, settlements and payments.
• Results aren’t guaranteed. While results aren’t guaranteed with a debt relief company either, you may find creditors are less willing to negotiate with you as an individual. This can limit your chances of success.

Professional debt relief

Professional debt relief programs, like National Debt Relief, work with individuals with unsecured debt, or debt that doesn’t have collateral like a home or a car. Credit cards, student loans and medical debt are examples of unsecured debt.

Debt relief companies do the legwork of negotiating with creditors on your behalf. It can take the stress out of figuring out what to say and how to settle your debt. Unlike doing your own debt relief, working with a professional debt relief company may stretch the timeline that you remain in debt and may negatively affect your credit scores.

Pros

• Less stress. When you work with a professional debt relief company, you don’t have to worry about saying the right thing to your creditors. The expertise and experience of a professional company means that you don’t have to research how to negotiate your debt. This can save you stress over the long run.
• Lower payments. Professional debt relief companies do a great job of negotiating to settle your debt for less than you owe. It may take a few years, but you can generally expect to pay less toward your debt than you initially owed.

Cons

• Prolonged time in debt. Although working with a professional company can lighten your load as far as knowing what to do, it’s possible that you’ll remain in debt longer than if you negotiated your own debt relief.
• Greater hit to your credit scores. Debt relief companies will ask that you stop making payments. Instead, you will make deposits into a savings account for future settlements. By not making payments on your debt, there will likely be a negative impact on your credit scores.

How to choose the right option

Like with any financial decision, the choice to DIY your debt relief or work with a professional debt relief company is personal. To help you decide, there are a few things to keep in mind.

1. Consider your needs and capacity. If you feel overwhelmed at just the thought of negotiating your debt, working with a third party might be best for you. If you feel empowered by working directly with your lenders to take control of your debt, then DIY debt relief could be the right path.
2. Determine how much time you have. Once you’ve employed the help of a professional company to negotiate and settle your debt, you essentially sit back and wait for them to update you. When you DIY your debt relief, you are the one spending time talking to lenders to find a plan that works for you.
3. Know your budget. Professional debt relief companies can charge fees of up to 25% of the enrolled debt. That can mean thousands of dollars saved if you handle your own debt relief. However, your peace of mind might be worth more than the dollar amount, and in that case, working with a professional might be the way to go.

While researching the best way to move forward in your debt relief journey, check out the best debt relief companies. There you will find Bankrate’s expert takes, fees for each company and other important information. 

Bottom line

A professional debt relief company can take time and stress off your plate while negotiating a debt settlement, but they can be pricey and your credit scores will take a hit during the process. DIY debt relief can be time-consuming and overwhelming if you’re unfamiliar with how to talk to your lenders. But you could save money in the long run and gain valuable experience talking with your lenders and negotiating a plan forward.

No matter what you ultimately choose, the best time to tackle your debt is now and Bankrate has the tools to help you get started.