Debt Settlement Savings
By Scott Sumerford on Monday, October 29th, 2007 :: 3:50 pmCategory: Watching Out 4 You
Debt settlement is a debt-relief method that can save you thousands of dollars over other debt-relief programs. Debt consolidation and bankruptcy have potential benefits but do not offer the same debt relief as debt settlement does for credit card debt.
Debt Settlement versus Debt Consolidation
Debt consolidation is a method of combining your credit card debt into one loan. Typically, the consolidation loan has a lower interest rate, which saves money on interest payments. However, debt settlement reduces the total debt and saves you thousands on your debt, not interest alone.
Home equity loans, as a means of debt consolidation, can also lower interest rates. Unfortunately, you receive lower rates because you are using your home as collateral. If you can not afford the new combined monthly payment, then you will lose your home. Fortunately, debt settlement does not require an additional loan to provide debt relief and you do not use your home as collateral to reap the benefits of the program.
Debt Settlement versus Bankruptcy
Insolvency is a last resort that will cost you time, money and opportunities. The new bankruptcy code increased the fees and filing costs for bankruptcy. It also made qualifying for Chapter 7 more difficult due to a means test that prevents consumers over the median income level from filing this type of bankruptcy.
Chapter 13 establishes a repayment schedule for consumers to repay their debt over a three to five year period. Not only will you spend three to five years repaying nearly every cent of your current debt, but you will feel the effects of bankruptcy for life. Though Chapter 13 only stays on your credit report for seven years, you will always have to list a bankruptcy on loan applications and job applications if asked.
Debt settlement’s unique approach to debt relief saves you time and money over other debt alternatives. Debt consolidation combines debt to lower your interest rates but doesn’t not reduce your total debt balance like debt settlement. Bankruptcy will eliminate debt, but you may end up repaying the full amount of your debt while suffering the effects of bankruptcy on your credit report.
Author Bio: Scott Sumerford has several years of experience working in the financial industry and has written a myriad of articles on various financial matters. Read more about how Credit Solutions offers a viable alternative to debt consolidation.
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