Debt Consolidation Vs Debt Settlement: What is Better?
Some people opt for debt consolidation instead of debt settlement and want to get rid of many payments and prefer making a single payment. But is it a wise option to exercise?
It was impossible to get loans for bad credit history in the past but now the situation has changed due to the recent financial crisis.
It is important to understand the concept of debt consolidation loan before you exercise this option. You also need to know IF debt consolidation is favorable for you.
Debt consolidation loan is an unsecured loan which you take to pay off other smaller but unsecured loans.
After you exercise this option, you have only one monthly payment to make rather than many smaller payments.
Debt consolidation loan may pay off all of your unsecured loans but you may never get out of this debt EVER.
Get a quote from various debt consolidation loan companies or individuals and compare their rates and calculate the interest that you will have to pay till this debt is settled.
The thing is when you go for debt consolidation you do nothing to settle your debt. The debt remains there and it does nothing but puts extra burden on you.
Debt settlement is a better option as a debt settlement company negotiates terms with your creditors and pays them in full so your credit rating is not affected to that extent.
Once you go for debt settlement, you stop making payments to your creditors you take the money that you were paying the creditors, and instead put it into a savings account.
Then you make lump sum settlements with each of your creditors, often for dimes on the dollar(tm).
Now you can rebuild your credit rating which takes a lot less time than you would imagine. And you are free and clear of all debts and can start living your life the way God intended instead of consolidating your debts into another loan and perpetuating the problem.
Debt settlement is indeed a good option compared to debt consolidation.
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Bankruptcy or Debt Settlement with Credit Card Companies? What is Better?
Are you AWARE of the after effects of bankruptcy and will you consider settling your debt with your credit card company? This article will help you in making this tough decision.
Debt settlement, in other words called debt negotiation, is an option that can give you an opportunity to get rid of your debt.
Debt settlement is also necessary as credit card companies charge high interest rates when you start to repay your debt and this can put unnecessary burden on your shoulders and keep you and your family enslaved for decades.
So instead of paying for your kids’ college, a decent life with vacations and a dignified retirement, you are perpetually making huge payments to the banks.
Not a way to live.
So congratulations: you’ve decided to DO something about your debt, to ELIMINATE the debt, so the question now becomes…
Bankruptcy or Debt Settlement?
Bankruptcy is another possibility.
Bankruptcy comes in two flavors, chapter 7 and chapter 13.
Chapter 7 wipes out your debts and lets you start over. It is like debt settlement, but ordered by the courts.
Chapter 13 bankruptcy is what the government and the banks hope you will exercise. It keeps you in debt for up to five years before you get any sort of forgiveness or debt settlement.
If you file a petition for bankruptcy then you suffer from its after effects in the future for quite some time even if the bankruptcy is dismissed.
Credit card companies may not give you any credit at all in the near future or may put a limit on your credit. Debt settlement is a wise option to avoid all these situations if you can manage the debt settlement.
You may be better off settling your debts than filing for bankruptcy. You may not hurt your credit rating as badly, and you pay your creditors more money and end up debt free without having ever filed for bankruptcy.
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