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Debt
Consolidation vs. Debt Settlement
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When
you realize that you have a debt issue going on, you
have several options to choose from: do nothing, create
a budget, seek credit counseling, get professional
debt consolidation help, opt for debt negotiation
& settlement help from a specialized company or
file for bankruptcy; this last option should always
be considered as the last alternative in mind because
of the consequences brought upon as result of it.
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However,
if you are looking to release yourself from debt,
you should define your plan towards the following
goals: lowering the amount of your debt, getting on
a fixed payment plan that is comfortable for you and
making sure your credit rating improves as result
of this process.
First,
you should know the differences between:
-
Debt consolidation &
- Debt negotiation and debt settlement
Debt
Consolidation and Debt settlement has its advantages
and its disadvantages. Nevertheless, they both have
one main objective in common, to free the consumer
from debt.
Remember, it is very important to completely understand
how every step of the process works in order to know
which to apply to.
In
debt settlement, negotiations take place with the
creditors. A debt settlement companys main goal is
to convince the creditors to give up a share of the
money owed by the consumer.
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is an example to further clarify this process: lets
suppose that a friend of mine, James, borrowed $1600
from me. After a while, when I told him to pay me my
money back, he said, “Nancy, I only have $700,
would you settle for those $700 upfront and forget about
the remaining $900. Occasionally, creditors take these
type of offers into consideration because sometimes
it is more expensive and time consuming to recover the
rest of the money. So, its worth it to stick to what
the consumer offers in order to settle the account.
Although
at first, this seems like the best of all opportunities,
it also has negative consequences:
-
It will appear on your credit report for as long as
7 years, as a negotiated and settled debt, so any
future creditor will check for this info, and that,
could avoid you from getting any future credit or
loans
- All future creditors will understand this as a warning
that you did not fully pay your past debt.
So
the question is, “When should you choose debt
consolidation or debt settlement?”
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People that have pending balances with several creditors
should choose debt consolidation
- However, if you are in a great amount of debt, do
not see any possibility of repaying those accounts
off, and taking bankruptcy into consideration, then
you should opt for debt settlement. by: Nancy Smith
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Copyright
2006-2007
White
Rock Online
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| Debt
Consolidation, consolidation, debt, finance, bad credit,
credit, loans, personal loans, consolodation loans,
credit cards, condolodate, loan, budget, savings, mortgages,
financial advice, payments, banks, lenders, financial
aid, resources, debts, payments, loan, loan payments,
credit rating, money |
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