Debt Consolidation vs Debt Settlement

If you’re looking to pay off your debt, a debt consolidation program can help you get out of debt much faster. There are a lot of advantages to enrolling in a debt consolidation programs. Even if you’re behind on your bills,there are debt settlement solutions available to help you settle your debts. Depending on your situation debt consolidation or debt settlement programs may help you. To start, we’ll  begin examining the benefits and cons for both programs to find out which program is right for you.

Current on your loans, but want to pay off your debt.

If you’re current on your bills, but you’re looking to reduce your monthly payments and get out of debt faster, a debt consolidation program would be the best option for you. With a debt consolidation program, the debt specialist will be able to negotiate with your creditors to try to reduce your monthly payments and develop a structured repayment plan that will facilitate you pay off your debt much quicker. Another advantage of a debt consolidation program is that you’ll be able to sustain or even increase your credit score. With the program, you make 1 check to your debt consolidation company, and they in turn pay your lenders directly. Because they’re able to negotiate better rates, they can often lower your overall monthly payment amount while being able to pay off your debt sooner. Most debt consolidation programs last between 12 to 36 months depending on your debt amount and what you can afford to pay each month. A minute negative is that most plans have maintenance fee of $30 to $50 per month; however, even with the maintenance fee, you still may end up paying a lot less than you would have if you didn’t consolidate. Plus the greatest advantage is being able to get out of debt fast.

Behind on your loans, but want to pay off your debt

If you’re behind on your bills, there is a good chance that debt collectors have started to constantly call you. This is a huge pain that is stopped immediately when you join a debt settlement program.  When you enroll, the debt settlement company contacts all creditors to let them know you’ve enrolled in their program. This usually stops the collection calls. Another advantage of debt settlement plan is that you can settle the debt with your lenders for a lot less than what you owe. The way a debt settlement works is that you actually stop paying your lenders and make 1 payment each month to the debt settlement agency. The company saves the money in an account for 12 to 24 months, then they try to negotiate with your lenders to settle the debt for less than what you owe. You could save up to 40%-60% by going through a debt settlement program. One setback is that your credit score will likely be reduced while in the program because you’ve stopped paying your lenders; however, if you’re behind on your bills, you credit has already been reduced.