Debt Settlement Works

Debt consolidation and debt settlement are two processes available to debt-addled consumers. These two options vary in one major way: debt consolidation only merges a consumer's debt, while debt settlement actually reduces a consumer's credit card debt by a huge percentage. Either option will help debt-wracked consumers in the long term, but they are not necessarily equal.

Debt consolidation is a very good option for combining high levels of credit card and other high-interest unsecured consumer debt, such as furniture and appliance contracts with deferred payment or interest. The debt solutions company has pre-arranged debt repayment plans with most credit card companies, including interest rate reductions on credit debts. The debt representative reviews your financial situation. If you qualify for debt consolidation, you are offered a debt consolidation program with the following features:

• Affordable, monthly payments that lower your previous payments and replaces your multiple payments to all your creditors.
• Elimination of harassing phone calls from creditors and collection agencies
• Repayment terms for paying off the consolidated debt in a finite amount of time, usually three to five years.

You must pay fees for the debt consolidation service, including an up- front enrollment fee and a monthly administrative fee, which is included in your monthly payments. Also, you must cancel all credit cards you include in the plan or eliminate the credit cards' use. Preventing accumulation of more credit debt after you begin a debt consolidation program is critical to successfully eliminating your debt.

If you cannot qualify for a debt consolidation program, your debt solutions company may offer a debt settlement program instead. The debt representative works with your creditors to secure agreement on a lower amount to pay off your debt. When you have saved enough money in an account you control, you can pay off the reduced debt amount.

While you are in the debt settlement program, your credit score initially drops. Part of the settlement with each creditor, however, requires they update your credit history when your account is settled or paid off to show it as paid in full.

Consult with a reputable debt solutions company to guide you in choosing the best program for you, whether it is debt consolidation or debt settlement. Do not postpone action until your growing credit problems leave only one option: bankruptcy.

Author bio: Brian Williams, a graduate of the University of Texas at Arlington, has 11 years’ experience writing and editing at daily newspapers in Texas. Having worked his way through college and experiencing the transition to professional life, Brian understands how credit affects people’s lives. For more articles by Brian on home loan options, go to http://www.creditsolutions.com. Credit Solutions is your alternative to debt consolidation.

• Credit Card Debt Relief
• Destroy Debt With Credit Solutions
• Credit Card Counseling For Student Loans