The Shocking Truth About Debt Consolidation
Most people don't know the difference between debt consolidation and debt settlement.
There is a major difference between the two.
First Debt Consolidation Companies simply take fees to add your debts together into one payment.
They won't tell you that most people drop out of the debt consolidation program because they are not really saving any money on their original debt.
People are essentially left paying as much as they were before they signed up for debt consolidation.
If you miss one payment, you are out of the program.
They also don't tell you that they are funded by the credit card companies.
Credit card companies use this as another method to collect money from the consumer.
You are charged a hefty fee for the privilege to to enroll your debts.
Your debt balance is not reduced and the interest rate is reduced minimally.
Meanwhile your credit takes a big hit because enrolling in debt consolidation program is considered third party intervention.
Third party intervention is viewed as almost as bad a bankruptcy by creditors because it indicates that you were not able to manage your own finances.
Debt settlement or Debt negotiation done by a licensed attorney will reduce the amount of debt you owe.
The attorney negotiates with your creditors on your behalf to lower the overall debt amount.
The average debt reduction is about 60 percent.
So, if you owe $30,000 in unsecured debt/ credit card debt, you can expect to have your debt reduced by $18,000.
A significant savings.
There are many Debt settlement companies out there, but, your best bet is to go with a company that has attorneys who oversee your case and negotiate on your behalf.
The industry is not yet regulated and this means that there are many companies out there who are unethical and have little experience.
That will soon be coming to an end when the FTC rules take effect.
The non attorney based debt settlement companies will no longer be able to operate.
Unfortunately many non attorney based debt settlement companies are making claims to the consumer that are simply not true.
There is no government stimulus plan for consumer credit card debt.
They use this to lure people in.
They claim that debt settlement is fast and easy.
That is not true.
It can take anywhere from 12 to 40 months to settle all your debt.
Debt settlement is not for people who just want to save money.
It does have an effect on your credit but once your debts are settled your credit score will go back up.
Debt settlement is for people who have had a hardship and can no longer pay high monthly bills.
Some of the hardships considered are people who have had an illness, effecting their income or expenses; people who have lost a job or partial income loss; divorce, etc.
There is a major difference between the two.
First Debt Consolidation Companies simply take fees to add your debts together into one payment.
They won't tell you that most people drop out of the debt consolidation program because they are not really saving any money on their original debt.
People are essentially left paying as much as they were before they signed up for debt consolidation.
If you miss one payment, you are out of the program.
They also don't tell you that they are funded by the credit card companies.
Credit card companies use this as another method to collect money from the consumer.
You are charged a hefty fee for the privilege to to enroll your debts.
Your debt balance is not reduced and the interest rate is reduced minimally.
Meanwhile your credit takes a big hit because enrolling in debt consolidation program is considered third party intervention.
Third party intervention is viewed as almost as bad a bankruptcy by creditors because it indicates that you were not able to manage your own finances.
Debt settlement or Debt negotiation done by a licensed attorney will reduce the amount of debt you owe.
The attorney negotiates with your creditors on your behalf to lower the overall debt amount.
The average debt reduction is about 60 percent.
So, if you owe $30,000 in unsecured debt/ credit card debt, you can expect to have your debt reduced by $18,000.
A significant savings.
There are many Debt settlement companies out there, but, your best bet is to go with a company that has attorneys who oversee your case and negotiate on your behalf.
The industry is not yet regulated and this means that there are many companies out there who are unethical and have little experience.
That will soon be coming to an end when the FTC rules take effect.
The non attorney based debt settlement companies will no longer be able to operate.
Unfortunately many non attorney based debt settlement companies are making claims to the consumer that are simply not true.
There is no government stimulus plan for consumer credit card debt.
They use this to lure people in.
They claim that debt settlement is fast and easy.
That is not true.
It can take anywhere from 12 to 40 months to settle all your debt.
Debt settlement is not for people who just want to save money.
It does have an effect on your credit but once your debts are settled your credit score will go back up.
Debt settlement is for people who have had a hardship and can no longer pay high monthly bills.
Some of the hardships considered are people who have had an illness, effecting their income or expenses; people who have lost a job or partial income loss; divorce, etc.