Debt Consolidation

Are those past due bill collectors calling? Is your current Job not paying enough money, therefore you are unable to stop the calls by making payments towards you debts? Weary about trusting a company to help you solve your debt issue without costing you more money?

With the current state of the US Economy and lack of substantial paying jobs more and more people are finding it difficult to get out of debt whether it is from school loans, credit cards or health related debt. Many companies provide a “Solution”, but at what cost can and will this solution be attained?

There are several options to solving debt issues, and which option is best for you? On a beginning note if you are a person with a debt of $5,000 or less the likelihood that a Debt Consolidation or Debt Settlement program would not be the best choice. In addition if you have no collateral or payment towards the start of the Debt Consolidation or Debt Settlement process then perhaps a different approach would be best such as Bankruptcy or a co-signed loan with a constituent who has a higher credit score to eliminate or lower the interest and provide a low monthly payment.

Although there are several options to solving Debt, there will be effects to your credit score. This effect on your credit score will depend on whether you consolidate or Settle your debt. Paying attention to the two different means of eliminating your debt could be the solution to solving your debt with the least stress.

Debt Settlement means you will agree with the loaning company to make on time and recurring payments towards paying off your debt in a speedier time frame (say 2-5 years depending on the amount of the loan). Also in settling your debt you can attain a letter from the settlement company in case you need to secure a loan of monies. One of the pluses to debt settlement is that with paying off your debt, you also begin to build and repair your credit score at the same time.

Debt consolidation entails taking out one loan to pay off many others. Often this is done to secure a lower interest rate or secure a fixed interest rate. Debt consolidation can range from a number of unsecured loans into another unsecured loan, yet mostly involves a secured loan against an asset that serves as collateral (most commonly a house, car, etc). Collateralization of the loan allows a lower interest rate than without it. In collateralizing; the asset owner agrees to allow the forced sale i.e foreclosure of the asset (car, house, etc) to pay back the loan owed. So therefore the risk to the lender is reduced while the interest rate offered is lowered.

Sometimes although rarely debt consolidation companies discount the amount of the loan when the debtor is in danger of bankruptcy, the debt consolidator will buy the loan at a discount and this is a reason debt consolidation is often advisable when a debtor is paying off a credit card debt. Credit cards can carry a much larger interest rate than even an unsecured loan from a bank and with debt consolidation the interest rate again will be either lowered or fixed and in a very good case both.

Now these two means are differentiated we now discuss the savings. Many cases prove that a savings of 50-65 percent of what’s owed by the debtor. Some cases in the USA & Canada have proved a savings as high as 85 percent. Usually the savings accrued to the debtor will be a payment of half or a third of what’s owed to the loaner keeping in mind the history of the debtor such as payment history currently established, types of creditors you have, how delinquent the debts are, what type of purchases the debts are for, your current financial situation, and what state you live in are taken into consideration when either consolidating or settling your debt.

We know you have a debt, we know the means to solve the debt, and we understand the savings that can be achieved in eliminating your debt. Now we must know what actions not to take in eliminating your debt. What not to do would be to not take yourself deeper into debt by making more credit purchases. Cut up those credit cards, throw away those loan applications. The worst thing you could do is to get yourself into more debt or run your credit score numerous times. Second and more important on what not to do is to rush into a settlement or consolation deal with a un-researched debt settlement company (in many cases recommended by non-experts or those novice to the field), some of these recommendations and solutions actually caused people worse financial hardship and forced them to file bankruptcy, which is the worst possible mark for a person’s credit standing.

Now on to what you must do in order solve your debt. That is to research and be patient. Here are some good starting points to be on the lookout for when selecting a Debt Consolidating/Settlement program:
Member of IAPDA – International Association of Professional Debt Arbitrators. Member of TASC – The Association of Settlement Companies. Member of the Chamber of Commerce in good standing. Work with 99% of creditors, and especially the tougher creditors like Citibank Has successfully reduced millions of dollars of consumer debt Written guarantee for overall savings. Give the greatest amount of savings. Lowest cost overall. Flexible program based on what you have available on a monthly basis. Helps protect your credit standing. Reputable and organized staff. Fastest completion times. Customer satisfaction response times.