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What Is The Difference Between Debt Consolidation Loans And Debt Settlement?

May 13, 2013 by arizona

What Is The Difference Between Debt Consolidation Loans And Debt SettlementOver the course of making it through life, we have decision points that either makes or breaks us. It could be about educational decisions, career and the like. They each have their own take on how well we live our life but none is as unique as the financial decisions we make. These has the lingering effects that we feel well into the twilight of our lives. And getting on the wrong end of those financial decisions could mean debt.

Debt can come in many forms just as getting rid of it has many options to choose from. The two most common alternatives are debt settlement and debt consolidation and choosing one from the other has different sets of pros and cons. It all depends on your current financial status and need.

Debt consolidation loans require getting financial aid so that you can pay off all your other debts. The whole idea is to combine your debts by paying them all off and maintaining the one loan that you used to pay. The end result will be a single and more manageable payment instead of multiple accounts. Another target is a lower monthly payment. There are personal loans that last for 5 years, this allowing you to distribute your balance over a longer payment period. It will result in a lower monthly payment. That lowered payment is also a result of low interest rates. Getting a low interest loan is important to make this happen. That can be accomplished if you have a good credit score or you have a collateral. But if not, then you may have to consider your other options.

Getting a loan to combine your debts also require you to have a steady income. You are not reducing your debt balance. Despite the lower monthly contribution, you will still end up paying for everything that you owe. If you cannot afford that, then your obvious option is debt settlement.

As a debt relief option, debt settlement is a great option because it aim for the reduction of your balance. This is done through debt negotiation. You can do it on your own or you can hire a professional to help you out. The whole process begins by defaulting on your payments deliberately. You want to convince your creditor that you are in a financial crisis and not paying your debts is one of the effective ways to do that. Instead of sending payments, you will put that amount aside for your settlement fund. You will then concentrate your efforts on convincing your creditor that you cannot meet payments anymore. You will haggle to pay pennies for every dollar that you owe. When you reach an agreement, you will pay only a percentage of your debt and have the rest of it forgiven.

As appealing as the whole reduction may sound, you have to remember that defaulting on payments will decrease your credit score significantly. If you do not feel comfortable with this and you have a steady income anyway, you can always opt for debt consolidation loans instead.

Filed Under: debt consolidation loans Tagged With: debt consolidation loans, debt payments, debt relief, debt relief option, debt settlement, debt settlement VS debt consolidation loan, negotiating skills

Why You Need A Debt Counselor

March 26, 2013 by arizona

Why You Need A Debt CounselorHiring a professional to help with debt relief is not always necessary. It really depends on how deep in debt you are and your personal capability to control yourself. After all, you got yourself in this debt situation. If it got to a point when it becomes a problem, you know that you have to change something about how you live your life and how you spend your income. Being in debt goes beyond the payments. That is only part of the problem. Your biggest concern should be to make sure that you identify what caused it so you are never placed in the same situation ever again.

This is probably the reason why some people want help when it comes to solving their debts. Hiring a professional that will advise you and provide you with the guidance needed to stick to your payment plans is one of the best ways to get out of debt. While it will not be easy, it will be a lot easier than dealing with everything on your own.

One of the professionals that you can hire is a debt counselor. Here are the benefits that you will get from these experts.

First of all, you will benefit from their knowledge and expertise. Since you got yourself in this financial crisis, you want to make sure that you get an outside opinion of how you should have been handling your finances. A debt counselor can provide you with this. They will help you analyze your income and expenses and find a way to satisfy your debt obligations despite your limited resources.

You will also benefit from the negotiation skills of debt counselors. To make sure that your money will fit all your credit obligations, you may have to request for lower monthly dues from your creditors. The counselor can help you with this. They will not be emotionally attached to the whole situation and they can talk to your creditor with more presence of mind and calmness. They will not be easily intimidated and besides, they may already have an existing work relationship with your creditors. The chances of them reaching an agreement will be faster and easier to achieve.

Another benefit to gain from the service of a debt counselor is that they will be able to screen all the intimidating and harassing calls that would have caused you a lot of stress. They will take over all communications on your behalf. That way, you will be left in peace to grow your debt payment fund. You can concentrate on building up your reserves so that you will never be placed in the same financial crisis again.

A lot of benefits can be enjoyed if you get a professional to help you out. But remember, they can only do so much. The lynchpin will be how you change your ways. You need to follow what the expert tells you to do. You have to start making the right choices as to where your money should go so that you do not waste it on unnecessary expenses.

Filed Under: credit counseling, debt counseling Tagged With: debt counselor, debt payments, debt relief, get out of debt, negotiating skills

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