Debt Settlement Agreement Or Debt Consolidation?

Debt Settlement Agreement Or Debt Consolidation?

 The days of only having Consumer Credit Counseling are long gone. Now, you can choose to go with a traditional debt consolidating program like this or to engage in debt settlement as two of your options. Both of them have their pros and cons. For some people, debt consolidation is still the best way to go. For others, settlement of debt may be a better choice.

Consolidating your debts is more or less the same thing as going through Consumer Credit Counseling. They negotiate lower interest rates on your behalf to speed up the amount of time that you need to pay off your bills. This typically gets it down to five to seven years of time. Plus, it will often reduce the overall amount of payment that you are having to make every month as an added benefit. You are then only required to make the one payment to the not for profit CCC organization every month.

This debt consolidation program is ideal for you if you struggle to make all of your monthly minimum payments. It is also a good course of action if you are not able to pay enough above the minimums in order to lower your overall balances. You should definitely talk with a consumer protection agency to learn if the company that you are contemplating working with has good standing with its participants.

Debt settlement on the other hand is a form of negotiating down the actual balances that you owe. It is a better program for people to pursue than complete bankruptcy, especially if you have enormous unsecured debt and very limited resources with which to pay it down.

With settling debts’ programs, creditors will agree to take a smaller amount of money in lieu of your full balances. The advantage to this program lies in the fact that you can actually pay the bills off this way in a six month to forty-eight month time frame. The faster time advantage over consolidating debts is found in having the amount that you must repay drastically reduced. In some cases and states, creditors will accept as little as forty to fifty percent of the money that you owe as acceptable payment.

This settling of your debts will be better for you if you are barely able to make minimum payments or can not even do that. Any person who is seriously contemplating bankruptcy will be better served by debt settlement. Once again, you should exercise great caution in picking out a company to settle your debts. You should get references and look at Rip Off Reports and Better Business Bureau sites before you sign anything or hand over your money to any company.

NOTE: By researching and comparing the best debt settlement services in the market, you will determine the one that meets your very specific financial situation. As usual, professional advise coming from a seasoned debt counselor is highly recommended.

Hector Milla runs the Debt Settlement Companies website – where you can see his best rated firms for settling debt.

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