Credit card Debt Relief -Does it worth it?
Most people are familiar with debt relief methods such as debt settlement and debt consolidation, but debt settlement isn’t the only method. Debt relief can be done on your own with no financial assistance from a debt settlement company, but how does debt negotiation get rid of all of my debt?
Debt Relief-Fact About debt consolidation companies
Most debt relief services are actually debt consolidation companies whose main purpose is to help you consolidate your loans into a single loan, thereby reducing your overall monthly payment. But they justify this by telling consumers that settling all of their debts will improve their credit in the long run, and therefore, settling all of their debt will help them improve their score later.
Unfortunately, this argument is not backed up by facts. There are many consumers who have been unable to successfully settle their debt because their debt amount exceeds their current credit limits.
Debt relief-Fact about debt settlement
Debt settlement is not debt consolidation – a consumer who consolidates his or her debt is actually consolidating his or her credit card debt, which already exceeds their current limit. Also, consumers who go into debt relief by paying their debt with debt settlement are not actually paying off their debt. They are just paying the debt company.
These facts alone should tell consumers that using debt relief options like bankruptcy and debt negotiation are not the most helpful ways to pay down debt. In fact, bankruptcy is not a good choice, because it not only leaves a scar on your credit report, but it can also negatively affect future financial opportunities for a long time.
So, what about debt consolidation? This is another method which claim to lower your credit scores and help you get out of debt, but there are two problems with this method. The first problem is that consolidation loans often do not last forever.
Debt Consolidation loans typically last anywhere from one to five years, depending on how much debt you are able to consolidate. During this time, you will probably have to pay monthly interest charges on this loan, as well as fees. This means that your overall monthly payment could very well go up to ten or fifteen percent. If you can manage to get out of debt within this time frame, this may seem like a great idea, but if not, it is a good indication that it is not the best method for you to use.
Fact about Debt negotiation and debt settlement
Debt negotiation and debt settlement, on the other hand, will eliminate all of your debt in the long run, by negotiating a better deal with your creditors to settle your debts for less than the total balance owed. This method is good for consumers who have high credit scores. If your credit score is low, you can still negotiate a good deal, because your lenders are usually more open to negotiating these types of deals with consumers.
Debt settlement is very beneficial when it comes to paying off your debt quickly – the process is known as debt relief, so it sounds very promising. If you are willing to take advantage of the services of a professional debt negotiator, they are trained to work with you and your creditors in order to find the best deal possible for both parties.
A reputable debt settlement agency will be able to contact your creditors and help them lower your balances and start negotiations to lower your interest rates. In many cases, they will also offer an elimination of fees and even late fees.
When debt is combined with a consolidation loan, it can be extremely beneficial for those consumers who are struggling with their debts, because they will only need to pay the interest on the debt. once the loan is paid off. Once the loan is paid off, there is no more debt, and all of their debt will disappear from their credit reports.