Debt Relief Options - How to Consolidate and When to Get a Debt Settlement

If you are in debt and want to get out of it now, you have two great options. Those options include either debt settlement or debt consolidation, but which one is best for you?

One of the first things you want to do is determine the importance of your credit score; how important is it to you? If you currently have a good credit score, debt settlement will negatively impact it. Although better than bankruptcy, it can take years to reverse the impact on your credit report. If your credit score is important to you like if you want to buy a house in the next few years, debt consolidation is a better alternative.

Next, look at your financial problems; are they only short-term or something that can go on for years? If you are only facing short-term money problems but are close to getting back on your feet, debt consolidation is not right for you. Debt consolidation is a long-term fix. Debt settlement can enable you to negotiate down your monthly payments to something you can afford for the time being.

Unfortunately, it isn't always easy to choose between settlement and consolidation, but it is important to make the right choice. The wrong decision can lead to even more financial trouble. For example, with consolidation, the company pays your bills and then you are responsible for repaying them. If you cannot afford these payments, you are back where you started and in debt all over again.

The best approach is to do a little bit of research online. Also, speak with both a debt consolidation company and a debt settlement company. Get more information on the process of debt relief and see how it can benefit you or if it even can at all.

Take a Closer Look Into Debt Settlement Programs

Varieties of Debt Settlement Programs and services from debt consolidators are widely available nowadays. So what are the significance of these?

Simply put, debt consolidators are legal mediators between debtor and the creditors/collection agencies in which outstanding debts are negotiated by the consolidator on the debtor's behalf to develop a settlement. However, the Debt Settlement Program must not be mistaken as credit counseling services or a consolidation loan. It is a process of helping you eliminate your outstanding debts. Any person with high credit card debt, medical bills, or any other unsecured debt has the legal right to negotiate their debts with their creditors. Services like these can be highly effective and can save you between 50-75%.

Programs like these were developed to provide you immediate debt relief. Before you consider filing for bankruptcy or signing a contract with another company, it is highly recommended to seek advice from debt consolidators. They are Certified Counselors with extensive knowledge about settling debt and will guide you through the process and evaluate your situation with one simple phone call. They will then help you establish a monthly savings plan that is designed specifically to settle your existing debt with your creditors.

A Debt Settlement Program can provide the most satisfying level of service. The positive outcome of this program rests merely on the relationships built with clients and with consumer lending institutions. Solid relationships furthermore, are built on trust, understanding, and mutual respect. Partnerships should be develop with the clients; finally leading them on the road to financial emancipation.

Credit counselors will explain how a program like this could serve you best. Try to take a look into the offered services. Free consultation is usually offered if it is your first time to avail such kind of service with an expert at debt settlement service.

Upon being accepted into a settlement program, your creditors will be immediately notified and the consolidator will demand that the lending institutions stop phoning you. It usually takes about 30-60 days for this to happen. Afterward, a creditor log must be kept for every phone call or letter that is received from a creditor. It must then be reported to the debt settlement company's customer care immediately.

A debt program makes an immediate impact on the amount of money in your pocket. It frees up more of your money to help your cash flow while it helps to have more to pay bills with. As your monthly payments under the program are typically less than what you were previously paying, you can keep more of your hard earned dollars for yourself and your family while on your way to financial freedom!

Once your debt has been negated for you, the anxiety caused with your debt problems will be a thing of your life history. The debt settlement program helps you and your family regains control of your finances. When you have completed this program you will be debt free and ready to build your financial future.

Does a Debt Consolidation Service Request a Settlement?

Some people use the words debt settlement and debt consolidation synonymously, though the two credit repair options are entirely different. While some people opt to negotiate settlements with creditors and then use consolidation to pay off all of their settlements in one fell swoop, this is not the standard method of repairing credit. Here is a brief explanation of the two individual methods:

Debt Settlement

When you are unable to pay your monthly credit card bills, a large late fee is charged at every occurrence. In a very short period, the amount owed to creditors can skyrocket until it is virtually impossible to pay off. Men and women that find themselves in this situation often employ a settlement agency to negotiate a reduced lump sum payment with each creditor. Your account is closed when payment is made but it is not closed in good standing.

Debt Consolidation

When you consolidate debt, you take out a single loan in order to pay off all of your credit accounts at one time. The loan amount is then repaid to creditors in a monthly payment that is custom tailored to fit comfortably within your budget. When you consolidate debt, all of your accounts are closed in good standing.

Overlap

Some people choose to use a consolidation loan to pay off their settled debt. They take out a single loan to pay off all of their reduced settlements at one time. However, consolidation companies will not negotiate settlements for you, unless you expressly request (and pay for) both settlement and consolidation services.

Some consolidation companies do not deal with settlement whatsoever and you will then have to do business with two separate companies, or find a credit repair service that is willing to combine the two options for you. A consolidation company will never automatically negotiate settlements for you as part of their services, as the two means of settling credit accounts are at their core fundamentally different in nature.

Free Credit Repair Debt Consolidation

In the current economic times people are doing all that is possible to reduce the amount of debt they have. Debt consolation has become very common. This can be explained as taking a single debt to pay the existing several debts that the individual may be having. This, however, does not mean that your debts have been cancelled. You will need to pay this debt in a single controllable debt. It is a good ideal for people with good credit reports. It may, however, affect your credit report depending on the type of debt consolidation you take.

In most cases, people seeking to take debt settlement loans have a bad credit report. It is therefore necessary that you consult the free credit repairing agencies before considering taking debt consolation. Debt settlement may affect your credit score positively or negatively depending on the type of debt consolation loan you take.

Generally you can repair your credit by ensuring that you pay your credit cards on time and making sure you do not add more to your debt by taking more of the credit cards. When considering debt consolation as a way of repairing your credit, it is tricky since closing credit cards might have an effect on the credit score. At the same time if you keep more of your credit cards open it is an indicator that there is available credit hence it will increase your score. This will really confuse you and that's why the services offered by credit repairing companies would be very necessary. Consult them for advice before considering taking debt consolation.

It has been noted that the effect on your credit score is entirely dependent on the type of debt consolidation that you decide to take. Debt settlement loans that make it possible for you to pay all your debt and still maintain your account will not affect the credit score in a negative way. On the other hand if the debt settlement maintains that you close the account it will affect them and at that negatively. Therefore look for free credit repair agencies to advice you on what to do.

A Better Alternative to Credit Card Consolidation

Many consider credit card consolidation an option for settling multiple credit card debts. People who resort to consolidating credit balances are often after the lower interest rates that one card company or loan provider offers. By moving the other debts into a single account, the debtor also gains the convenience of paying monthly dues only to a single creditor.

Consolidation of card debts usually involves a secured loan against an asset, often a home, which serves as collateral. Aside from a good credit rating, people who are considering this option must also have a significant equity in their home. In essence, credit card consolidation is merely shifting a number of unsecured loans to a secured loan, but the total amount of debt is not really reduced.

In contrast, debtors may find a card debt settlement scheme that allows them to pay for multiple debts at significantly lower monthly payments. Credit negotiation is key to cutting the cost of debt to each creditor. Upon successful negotiation, the debtor may then settle the remaining balance, which could be as low as half the original amount.

Debt settlement, as the name implies, is aimed at eliminating debt at significantly lower cost, as opposed to debt consolidation, which merely takes out one loan to settle others. In this light, debt settlement is a better alternative than credit card consolidation alone. Some debt settlement firms also allow the combination of these two payment schemes, which could be really advantageous for people looking for a fast and efficient way of settling multiple card balances.

Are Debt Consolidation Lenders Recommendable?

Debt consolidation can be a very effective way to clear your credit background of any hiccups. Lenders for this type of settlement can be anything from agreeable to a very exacting party. With the worse end of the settlement, the lenders will always withhold information from the client subjecting them to a range of levies and penalties in case of default. Such dishonest attitudes steal away the good intentions of debt consolidation. One, however, is well advised to seek legal counsel as well as the services of a debt expert. These experts will give you the advice needed to make an informed decision as much as helping you administrate the operations of the settlement.

With debt consolidation comes along the responsibility to keep record of correspondence between the debtor and the lender. This will come in handy in case any issue needs to be clarified as well as serve the important purpose of verifying that any charges made on you by the lender are actually authentic. Debt settlements involve a lot of strategizing on the part of the debtor and this would mean doing without a lot of the things an investor would do normally. One involved in a debt settlement program cannot participate in any ventures involving high risks. This might mean not enjoying the benefits of such trades as much as it would warrant taking up a business practice that brings in a steady cash flow.

Consumerism is curtailed with the feature of debt consolidation in your portfolio. Consumer goods certainly involve a factor of extravagance which in excess would damage your face if at all you were involved in a settlement program. Debt settlement programs are sensitive and should involve a lot of wit as well as planning. Relying solely on the funds facilitated by consolidation lenders could deal a major blow on your asset base meaning that your balance sheet will have a major defect. Such accrual of heavy duty liabilities can hurt your credit lines further than they would have been before taking up the program. Settlement programs need a kind of restraint for success.

Does a Debt Consolidation Company Request a Settlement?

Debt consolidation is different from debt settlement and it is important to make the distinction between these two services clear. There are different debt relief programs that will work most effectively toward the financial freedom of various groups of individuals. Understanding the differences between consolidation and settlement services will help you to select carefully the debt management plan that is right for you.

Consolidation

Debt consolidation is the practice of acquiring a single loan that effectively pays off all of your creditors in one single blast. The consolidation loan is then paid off in monthly installments that are submitted to a single company, at an interest rate and set fees that are agreed upon by both parties concerned.

Consolidation loans are therefore used to pay off your creditors in full. There are no negotiations involved in this process that are aimed at reducing the amount of money owed to creditors in order to settle your accounts.

Settlement

When individuals miss several payments or find themselves in a situation where they are perpetually being charged late fees on their account, the amount of money owed can quickly swell to enormous amounts. In these situations, it can seem nigh unto impossible to ever repay both the principle debt and all of the late fees associated with the account.In this case, settlement negotiations can be entered into in order to cut away a large portion of the late fees and interest charges associated with the account and to settle the account for an agreed upon, reduced amount of money.

How to Choose

Many individuals may be tempted to choose a settlement option when they hear that the amount of money they owe can be reduced. However, settlement options can have adverse affects on your credit rating, whereas consolidation loans help to restore your credit rating to a stable position.

If possible, individuals should attempt to resolve their debt problems with a consolidation loan in order to protect their credit rating and close their accounts with creditors in good standing. Requesting a settlement should be the last solution you look to with your debt relief organization in your attempts to restore your credit to good health.

Debt Settlement Processing - A Few Things You Must Know

Debt is one word that is so much dreaded, especially when it involves huge amount. Before you embark on any Debt Settlement Processing, you have to acquaint your self with debt matters and the options available at your disposal. Such information can be obtained by either consulting experts in debt management or meeting with your financial institution.

Bankruptcy Should Be Your Last Option

Before you embark on bankruptcy as your debt settlement remedy, make sure you must have tried other possible means until you are sure that there is no more remedy other than going bankrupt; in that case your choice is justified. By the way, bankruptcy is a Debt Settlement Processing undertaken by individuals who has no other means of repaying their debts.

What Happens When You Are Declared Bankrupt?

In the first place, the court steps in as a mediator between you and your creditor. The court from that time will step in and ensure that you are shielded from any adverse treatment your creditors might want to mete out to you.

If in the course of time, you are able to come up with part of the payment for your debt, you will only do so through the court in a space of 3 years.

When three years elapses, any part of the debt unpaid shall be written off.

Your bankruptcy period is usually for a whole year

Your car will not be confiscated since it is rational for you to keep it, besides vehicle is not regarded as a property of high worth.

Also, any of your home items that of a valuable worth will be left for you, only on the condition that the worth of these items is not more than what it will cost in replacing them.

You will be required to sell any asset in your possession that is of high worth e.g. costly vehicles and antiques.

If you have holding to equity or any landed property, whether you have full possession of the landed property as the owner or you are still paying mortgage on it, it will be transferred to the court. The court in return will take action to realize this equity for the benefit of your creditors. This means that you have the option of getting a third party to purchase the equity by making offer to the court or the court will be forced to make the sales of the equity by themselves.

There seem to be some modifications in the Enterprise Act of April 2004 concerning laws governing bankruptcy. This change is favorable to some individuals who want to start bankruptcy debt settlement processing as a means of debt settlement, but to some people, it is not.

It is highly important that any one seeking to start debt settlement processing in bankruptcy, should first consult debt management experts with the details of his/her debt problems. Advice will be offered to you on the best debt management solution that is suitable for your peculiar debt problem. Bankruptcy might not be the best solution for your debt issues.

Your Medical Debt Settlement Could Be Closer Than You Think

When you have accumulated thousands of dollars of medical bills (which is not an altogether difficult task) it can seem as if your medical debt settlement finish line is a hundred years away. After all, it's not as if your house payment, car payment(s), insurance premiums, and other regular bills simply disappear when you have a medical emergency that results in a high medical debt. Still, your medical service providers will expect to be paid, and their understanding for your financial situation only seems to go so far.

However, there are some options that any person can take advantage when medical debts get out of hand and threaten to ruin your financial future. For instance, a lot of people are not aware that the medical debts that you have accumulated are not set in stone. They can be negotiated, and medical debt negotiation is now a business in and of itself, where professional negotiators are able to drastically reduce the amounts that people owe to hospitals and doctors every day.

If you want, you can even give it a go yourself and see if you can get your medical service providers to reduce your debts. They want a medical debt settlement as much as you do, after all, and charging you an amount that you prove you are unable to realistically pay isn't going to help anybody.

Then again, if you have a number of medical bills, you may find that the best route to medical debt settlement is by consolidating your medical bills to one debt. The advantages to this are that you will almost always pay a lesser total amount, get payments that work within your budget, and avoid the fees and penalties that can usually keep you from ever catching up.

These are just a couple of the solutions that are available for those that truly want to settle up on their medical debts for once and for all. If you count yourself among those people, you will want to look into any and all options to help you pay off your debts for good.