Debt Settlement?How Does it Compare?

Author: Mansi Gupta








Debt settlement has quickly become one of the preferred methods of reducing credit card debt and starting a new financial future that is free of the vicious cycle that credit card debt problems create! Why has debt settlement become so popular lately? The benefits of a debt settlement program can probably best be illustrated by comparing it to the other options available to consumers caught in the mounting credit card debt nightmare. This information is intended to give you some insight into why people often choose debt settlement programs over the other D.J. Chark Jaguars Jersey , previously more ?methods of debt reduction out there.









Debt Settlement or Consumer Credit Counseling: The most familiar debt reduction concept for the past couple decades has been the consumer credit counseling method. Consumer credit counseling plans are designed to insure a full payback of the unsecured debt owed to the creditors, as well as any interest that has been accruing. These organizations are non profit agencies, and qualify as such for certain federal exemptions based on their non profit classification. They are funded in a large part by the creditors in the form of ? A consumer credit counseling agency will set up a debt management plan (DMP) that they feel offers significant interest savings Courtland Sutton Broncos Jersey , and a repayment time frame of around 5 years. All of your unsecured monthly creditor payments are consolidated into one payment that you make directly to this counseling agency. They in turn, distribute your monthly payment to the respective creditors. In contrast to a debt settlement program, a DMP requires you pay the full debt back and any accrued interest charges. Therefore Connor Williams Cowboys Jersey , you are paying significantly more than in a debt settlement program where your credit card debt balances are settled for less than the full amount due. Because a DMP is designed to remit the full unsecured debt and accruing interest charges, the monthly commitment amount is typically much higher, and may still not provide any reathing room?to a consumer who has already been under a prolonged period of extreme financial stress. Any debt reduction program requiring a longer timeframe to complete seems less attractive as a solution.









Debt Settlement or Debt Consolidation Loans: A debt consolidation loan is not actually a method of reducing unsecured credit card debt problems but rather trading ? Debt consolidation loans are a well known debt management option. However Christian Kirk Cardinals Jersey , there is a risk involved as collateral is almost always required to secure a favorable interest rate for a debt consolidation loan. Not surprisingly, that collateral is typically your homeresidence, and your unsecured debts are essentially converted into secured debt through the loan process. This form of managing a credit card debt problem is highly risky. Whatever placed you in the financial difficulties you now face (job loss Carlton Davis Buccaneers Jersey , illness, family matters) could occur again in your future. But the next time, you may not default on your monthly payments are you could lose your home. Exercise extreme caution when opting for a debt consolidation loan in lieu of a debt settlement program.









Debt Settlement or Bankruptcy: If you have been under severe financial pressure for an extended period of time Calvin Ridley Falcons Jersey , filing bankruptcy and hopefully walking away from the financial nightmare may look quite appealing. A bankruptcy discharge of all your unsecured certainly can give the illusion of wiping the slate clean and starting fresh. But is that what really happens for your financial future? Filing bankruptcy does have consequences that are far reaching. A bankruptcy filing remains on your credit history for up to 10 years and can impede you from qualifying for future home or auto loans. Should you be able to qualify for a home or vehicle loan, it is doubtful it will be at an attractive rate of interest. You are deemed to be a credit risk after a bankruptcy discharge. Additionally, many employers screen their most serious applicants by requiring a credit report. Wouldn芒鈧劉t it be a shame to lose a potential position because your bankruptcy discharge made you less desirable than the other employment candidates in the running for the terrific job? This risk is quite real and merits some careful consideration before you select filing bankruptcy instead of attempting to succeed at a debt settlement plan.









In general Brian O'Neill Vikings Jersey , investigating all your debt reduction options while objectively and carefully weighing the benefits and the consequences of each, should help you reach the best financial decision for you and your family.





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About the Author:



Liv Worthington has worked in the debt management field for many years. Liz suggests that you explore debt settlement services to find out if credit card debt settlement is one of the debt remedy solutions that might work for you!

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