Credit card debt consolidation

Debt consolidation versus debt negotiation are two options that are available to you if you need debt assistance. When your monthly bills become too much for you to handle, it makes sense to use debt consolidation or debt negotiation for solving debt and credit problems.

Debt Consolidation

Debt consolidation services have prearranged debt repayment plans with most credit card and collection companies. When you sign up with a debt consolidation company you are offered a lower overall monthly payment based on a lower interest rate they have arranged with the creditor.

This payment is lower than what the credit card companies offer you, saves you money every month and is often the best way to consolidate debt.

One benefit of a debt consolidation repayment plan is it will stop you from getting harassed by your creditors as long as you make the new, lower monthly payments.

The downside of the debt consolidation repayment plan is that you have to cancel all credit cards that you include in the plan. You are also charged your first payment you make toward the program and an additional monthly administration fee. This administration fee ranges from flat fees of $10-$50, while others charge a $5 fee for each creditor. That means you’ll pay about $30 a month that doesn’t go to paying off your debts.

The debt consolidation program benefits you if you have high interest rates or have higher credit card bills than you can manage. Some people like to make only one payment to one company for all of their debts.

Debt Negotiation

Debt negotiation is sometimes referred to as debt settlement. This is most often offered to people who can’t handle a debt consolidation program. If you can’t make the minimum payments of a debt consolidation repayment plan or haven’t made payments in the past 3 months, a debt negotiation program is the next step for solving debt and credit problems.

One benefit of a debt negotiation program is you stop making payments to your creditors. The debt negotiation company either takes monthly payments from you and keeps it in an account, or lets you keep the money in your own account.

While you are making these monthly payments to the debt negotiation company, they negotiate with your creditors for a lower payoff of around 40-50% of your total amount of debt. Once the negotiated settlement is agreed upon with your creditors, the debt negotiation company makes a one time payment to them.

A downside of the debt negotiation program is it lowers your credit score for as long as you are in the program. However, most debt negotiation companies require the creditor make the credit report show paid in full so it doesn’t show up as a negative on your report once your account is settled.

Some debt negotiation companies include a credit repair service that will remove the negative items caused by the debt negotiation program. You pay for this service as part of their program.

Now that you have an idea what debt consolidation versus debt negotiation is choose which one will work best for solving debt and credit problems for you.

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If you have been dealing with financial strains for some time, as a result of a job loss or salary cut, then you probably would be surprised to hear that you can get quick and easy debt relief through a credit card consolidation program! Yes, it is true. Every day, thousands of people are getting out of debt and regaining control over their financial lives. Would you like to become one of those people? It’s really quite easy.

The first thing that you need to do is look into credit card consolidation options, and determine which of the companies near your area provides the most accessible and convenient debt relief programs. Research is the hard part. You want quick and easy answers to your problems, but the research necessary for finding the best company will take some time. Of course, once you settle on a company to help you, the process should definitely be fast!

Go online and find a list of the companies operating in your area and take the time to find out as much as you possibly can about each of them. Watch for reviews by clients, past and current. If you find that some people rate a firm poorly, then stay clear of them! There are so many other companies that you can work with.

When you have decided on a company to work with, be prepared and you will keep the process simple and quick! Make a list of your creditors, the balance of your accounts of unsecured debts and other useful financial information. A copy of your credit report is good to have on hand as well. By walking into your initial consultation with all of this information on hand, you will make the process so quick and easy! You will give this information to the debt specialist that you meet with, and they will provide you with an analysis of your debt and a proposal of how they can best help you to consolidate your credit card debt.

Once you receive a proposal for consolidating your unsecured debt, you will just need to determine if the program is right for you. If so, then a few papers will need signed before your consolidation loan is complete. Once it is, your creditors will be paid and you will officially be on your own path to financial freedom.

Consolidating your unsecured debt is the absolute quickest and easiest way to obtain debt relief. You will never be sorry for consolidating.

By: Hector Milla

Two of the most popular solutions offered by debt relief services to current indebtedness is to opt for either debt settlement and debt consolidation. Let’s look at both and decide which is better for you.

What Is Debt Settlement?

Debt settlement is when you or your representative from a debt relief agency call up the charge card company to renegotiate for a loan agreement. This process usually involves the following steps:

1. Calling up the charge card company, asking for the manager of the settlement department, and asking to renegotiate your previous loan agreement

2. Telling this manager about your financial predicament in some detail, then asking for some type of concession on your payment agreement until you can resolve your personal crisis. Your requests can include asking for a lower interest rate, asking for a temporary hold on your interest completely until you can catch up on your payments, or asking for a discounted total amount.

3. If this manager is not willing to compromise in any way, then you show you mean business by quitting making all payments. However, you now begin sending money previously designated for payments into a savings account.

4. After a period of from three months to six months, after the collection agencies have failed to make any progress in intimidating you, you open up the negotiations. By now, your creditors are willing to accept anything rather than nothing, so you now pay off the amount in your savings account in lieu of the previous total amount.

What is Consolidation?

Debt consolidation is getting a loan to pay off your other loans, including all your credit cards, reducing all balances to zero. Here are the typical characteristics of this type of loan.

1. It is a low interest loan designed to pay off high interest revolving card debts.

2. It can be either offered as a secured or unsecured loan. If a loan is secured with collateral, it will be offered at lower interest.

3. This loan is obtainable if you have steady income and meet the minimum qualifications. A bad credit status is not part of the criteria for qualifications.

4. This loan will reduce all balances to zero on charge cards and the creditor will have to mark your credit scores as “paid as agreed.”

Know The Winner

If you have a choice, the Credit Card Loan Consolidation Program is better because you not only pay your creditor off in full but you also raise your credit score. It is also easier to apply, simply pay off the charge cards and move on with your life.

By: Hector Milla