Debt Consolidation V/S Debt Settlement

2006-10-25T22:56:00.000-07:00

Debt consolidation is when you combine several loans into a single loan to get a better interest rate and simpler payments. Debt settlement is where you call your creditors and try to get them to reduce the amount you owe.

Obviously debt settlement sounds good because it reduces the amount you have to pay. However, if you have made a commitment to repay someone, you should do your best to repay them. However in some cases if you have fallen way behind and your original debt has aquired a high percentage of fees from late payments, etc. settlement might be an options. Credit companies may be more interested in getting what you originally owed or even a portion of what you originally owed rather than forcing you into bankruptcy. If you go bankrupt they may get nothing, or they may get less than what you could give them if you worked out a debt settlement agreement.

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How much do you spend ?

2006-10-25T22:34:00.000-07:00

When most people try to get out of debt, their focus is on how much they make. The first thing that they do is start looking for ways to make more money. Making more money is one thing that you usually don’t have a significant amount of control over. However, you do have significant control over how much you spend.
This is where debt consolidation comes into play. For people who are deep in debt, one of their biggest expenses is interest. A well conceived consolidation plan lowers the amount spent on interest and lets you apply that money to the principle of your debt to pay off your loans more rapidly. In some cases debt consolidation also extends the amount of time you have to pay off your loans which frees up some of your cash, but keeps you in debt longer.

By lowering the amount you spend through debt consolidation you can apply extra money to paying of the loan and get out of debt faster. If you can lower your spending in other areas as well and apply those savings to paying off the principle of your debts you can get out of debt even faster.
Generally in the USA, the standard of living is much higher than in the rest of the world. Most families can cut their expenses by 10% without significantly impacting their standard of living. By looking for small ways where you may be “leaking” money, you can obtain savings that can be applied to getting you out of debt more rapidly.

However, there are a few Debt Consolidation Tips and Serviceswhich i think could be of use if you are a first time reader.