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Debt
Consolidation Loans
versus Debt
Settlement |
Debt is one
word nobody likes. But learning how to get rid of it
– that’s where people sit up and
start listening! You may have heard of
debt consolidation or debt settlement, but how
are they different?
Learning the differences between the
two can help you make a decision
on which method of reducing debt is
right for you. Let’s take a look
at each one:
Debt Consolidation means you combine all of your outstanding
debt into one loan. Using this type
of debt reduction program allows you to
lower your interest rates and pay a
smaller monthly payment.
If you consolidate your
debt, there are several loan choices to meet your
needs. You can use a personal loan, a home equity
loan, borrow from your retirement, or even transfer
balances from one credit card to
another!
You don’t want to be transferring
your debts from one loan to another unless it will
benefit you in some way. Consolidation usually
allows you to pay your entire debt off faster than if
you had each one separated into various
accounts.
If you
plan on using debt
settlement as your method of choice to solve financial worries, then
you are allowing someone else – a
third party – to work with your
creditors and negotiate a deal to pay
off your debt.
Using debt settlement,
you’ll have a
credit counselor who helps
you close your accounts and pay off your balances. They may
be able to help you get lower
monthly payments or even negotiate a deal
to make a payoff for much less
than you owe.
Before you hire
someone for this task,
call your creditors directly and ask them for a settlement or
payment plan. Most will be happy to
oblige – as long as they have
some way of recovering at least part
of their money.
© 2004 - All Rights Reserved. Apex Personal Loans
Store does not assume any responsibility for the
accuracy or completeness of the above article. Please
consult a financial advisor for specific advice
pertaining to your particular situation.
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