Is Debt Settlement an Alternative to Debt Consolidation Loans?

By -
When your financial situation is choked by debts, frustration kicks in and one goes with the next available debt relief option. A few minutes spent surfing the internet reveals that debt consolidation is one of the best debt relief options because it promises lower interest rates and a big sigh from multiple monthly debt payments. You will also come across debt settlement, which cuts off creditors’ incessant calls to you. However, these two operate very differently and if in a murky situation with no means of repaying debt, debt settlement will suffice.

debt


Debt consolidation

A debt consolidation loan plan involves taking a big loan to pay off smaller debts at lower monthly interest rates. You’ll be expected to pay off one monthly bill. However, your income, stability, credit score, and security determine qualification.

You should take a debt consolidation loan when looking for more affordable loan repayment terms as well easy management of payments and reduction in late payment penalties. Most people who qualify for debt consolidation loans afford their loan payments, but this isn’t the case in debt settlement cases.

Debt settlement

A debt settlement plan, on the other hand, involves having a debt settlement expert negotiating with your creditors for cancellation or reduction of the balance owed. This has been seen to be more favorable to debtors who cannot afford to repay their debt.

Debt settlement process

Debt settlement applies for debts like credit cards, personal loans, private loans, utility bills, mortgage ‘short pay’ balances, medical bills, car loans, and leases. The settlement process involves:
1. Your ability to repay the debt is ascertained from your living conditions and your payment stub. Applicants who qualify for debt settlement have a limited ability to repay their debts and in successful settlement cases, they can walk away without paying a penny.

2. Negotiations with creditors include revelation of your true financial status. Your credit will have to agree with getting as much or as little as possible from the settlement.

3. When in agreement with the partial loan payment, an exchange account is set up for lump-sum payments.

4. The agreed settlement will render the debt fully paid regardless of the fact that it has only been repaid partially.

Which is the best debt settlement company?


In the same way that you use online debt consolidation reviews to determine the best debt consolidation companies, online debt settlement reviews will guide you in finding the best debt settlement companies. The best company does the following:


Gives full disclosure: 

The best debt settlement companies give settlement plans with all fee details and associated costs. You will also receive a reliable estimate of the number of months or years you will have to wait before clearing the agreed lump sum in the exchange account.
Moreover, information on how much money you must have saved before offers can be made to the creditors.

Easy to understand policies: 

Financial policies tend to be complicated but a reliable debt settlement companies offer easily understandable debt settlement programs.

Gives you the last word: 

Before finalizing all agreements, you will receive all the settlement offers for final approval

When you have racked up too much debt, have insufficient income to repay your debts, and your tanked credit score makes it impossible for you to qualify for debt consolidation, debt consolidation is your best relief. The payments may or may not affect your credit score. However, in extreme cases where bankruptcy is the next option, your creditor may settle for so little or nothing saving you the imminent financial pitfall. Since consolidation doesn’t work when you are unable to repay your debt, debt settlement comes in to save you.




Comments

Post a Comment

Popular posts from this blog

Cleaning 101: Declogging drains

By -
Image
Clogged drains are typically easy to fix, as we can unclog it physically, chemically or a combination of both.   However, it usually depends on the nature and extent of the problem so before calling on an experience plumber in parramatta , here are some tips that you may try to uncork that clog. The kitchen sink is most often clogged with fats, grease and oils, unplug or remove the strainer, as grease accumulate around the strainer in the sink. Remove and wash away anything that has collected around it. You may also use liquid sosa or liquid lye, just pour it straight then wait for 10 minutes before flushing it with tap water.   Better yet pour in the chemical at night before going to sleep when nobody will use the kitchen sink anymore. Flush it with water the next morning.
click here to read more >>

6 Simple Ways to Save Money at Home

By -
Image
  With the economy being what it is, people are more conscious about their expenses. The last thing you want to be doing is spending money on things that are not essential. There are simple ways to save money at home, which can cut down your bills significantly. Use energy-efficient appliances If possible, buy energy-efficient appliances such as washing machines and dryers that have lower water and energy consumption levels. These will help save energy and thus money over time because they consume less electricity than their non-efficient counterparts do. Consider replacing your old refrigerator with an energy-efficient refrigerator. You may not be aware of the fact that your fridge is one of the biggest consumers of power in your home. An inefficient refrigerator can use up to 300 kWh per year, which is more than 10% of the total household energy bill. So, it is important to get an efficient one that uses less electricity and saves you money on your electricity bill. Use en
click here to read more >>

How to Teach Children About Money in 7 Easy Steps

By -
Image
  Money can be a touchy subject for kids and parents alike, but it's also a topic that needs to be discussed. We want our children to understand the value of money and how it works, but it can be tricky to discuss these concepts without sounding preachy. As a parent myself, I've found that making learning about money fun is one way to get my child interested in the topic without worrying about them feeling like we're pushing an agenda or being lectured at. Here are some fun ways that you can teach your child about money : Let kids invent their own games or create their own money. Let kids invent their own games or create their own money. This works especially well with older children who already have a grasp on financial concepts like spending, saving, budgeting and investing. Let them create their own games using whatever they want as currency — anything from marbles to candy to paper clips could work! If they want to make up actual rules for using this new currency (f
click here to read more >>