How good is debt settlement over debt consolidation? Is it a more reliable method? ?
What I am interested to know is if Debt Settlement really works and if you know of anyone who has been through it.
Debt Settlements are very different from Debt Consolidations.
Typically, you can do Debt Consolidation *BEFORE* you get into too much trouble with your creditors. It is a way of reducing your multiple monthly payments into a single lower payment. The objective is to get your monthly budget more manageable. Debt consolidation only works though if you do not incur any new or additional debt after you complete the consolidation.
Debt Settlements are agreements (typicall entered into at some point after the debtor has defaulted on payment) with a creditor or the collection agency representing a creditor where the creditor agrees to accept an amount lower than the stated debt. While this seems like a good deal for the debtor, it has and can have many drawbacks.
Often the creditor and or collection agency have tacked on a significant sum to the original debt, so much so that even the discounted amount may be more than you originally owed at default. While it is legal for the creditor and/or collection agency to add interest, fees, and penalties, some of these additions can be quite high (in some cases they may even exceed the legal maximums). Further, if the agreement is to begin a payment schedule, the interest, fees and penalties may continue to accrue (often making it impossible for the debtor to ever pay off the debt). Don’t forget that the dollar amount of the "discount" must be reported as taxable income by the debtor.
If entering into a debt settlement agreement , be sure to have everything in writing and be more than sure you understand everything you are agreeing to.
While many debt collection agencies are honest and sincere in helping you resolve your debt problem, some are not and can make things much worse.
Be careful out there.
Debt consolidation means you intend to pay your bills. Your credit suffers a little bit, but eventually you pay everybody.
Debt settlement means you don’t intend to pay your bills. You stop paying them and when they are about to sue you, you ask (or the debt settlement people ask), will you take 50% and consider this to be payment in full? The other 50% is cancelled (it’s income to you).
The debt settlers tell you so pay them instead of the people you owe and they keep a lot of the money you send them as their ‘fee.’
References :
Debt Settlements are very different from Debt Consolidations.
Typically, you can do Debt Consolidation *BEFORE* you get into too much trouble with your creditors. It is a way of reducing your multiple monthly payments into a single lower payment. The objective is to get your monthly budget more manageable. Debt consolidation only works though if you do not incur any new or additional debt after you complete the consolidation.
Debt Settlements are agreements (typicall entered into at some point after the debtor has defaulted on payment) with a creditor or the collection agency representing a creditor where the creditor agrees to accept an amount lower than the stated debt. While this seems like a good deal for the debtor, it has and can have many drawbacks.
Often the creditor and or collection agency have tacked on a significant sum to the original debt, so much so that even the discounted amount may be more than you originally owed at default. While it is legal for the creditor and/or collection agency to add interest, fees, and penalties, some of these additions can be quite high (in some cases they may even exceed the legal maximums). Further, if the agreement is to begin a payment schedule, the interest, fees and penalties may continue to accrue (often making it impossible for the debtor to ever pay off the debt). Don’t forget that the dollar amount of the "discount" must be reported as taxable income by the debtor.
If entering into a debt settlement agreement , be sure to have everything in writing and be more than sure you understand everything you are agreeing to.
While many debt collection agencies are honest and sincere in helping you resolve your debt problem, some are not and can make things much worse.
Be careful out there.
References :
http://en.wikipedia.org/wiki/Debt_consolidation
http://en.wikipedia.org/wiki/Debt_settlement
http://www.consolidationlibrary.com
http://www.budhibbs.com
http://credit.about.com/od/debtmanagementsolutions/qt/debtsettlement.htm
don’t worry there are number of online sites which provide easy ways of obtaining sound debt advice and offering them an online solution that will eliminate your debt problems.thanks
References :
For more info. visit http://www.netdebt.com