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Related Articles

Benefits of Debt Settlement

Debt Consolidation vs Debt Settlement

Debt Relief vs Bankruptcy

Pitfalls of Declaring Bankruptcy

Reasons for Debt Consolidation

The Bankruptcy Process Explained

What Is Debt Consolidation?

What Is Debt Negotiation?

What Is Debt Settlement?

What To Do if You're In Debt

 

Top Consumer Reviews Articles

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Debt Consolidation vs Debt Settlement

When it comes to debt relief, there are several different types that can provide effective results to those who need to either get rid of their debt through a structured payment program or in one lump sum payoff. Quite simply, this is the difference between debt consolidation and debt settlement. Before deciding which one is right for you, it may help to know a little more about each option and how it will affect your future ability to obtain credit.

Many people may not realize this, but there is a big difference between debt consolidation and a debt consolidation loan. The latter involves a lender granting money to be used for the purpose of paying off other debts in exchange for one single monthly payment. Debt consolidation, on the other hand, is a term used by many non-profit organizations that offer debt management services without actually issuing a loan. With debt consolidation, your bills are still combined into one lump sum payment and payable directly to the non-profit agency who then distributes individual payments to your creditors based on a customized agreement.

In most cases, a debt consolidation program will allow debtors who are seriously delinquent with their bills to regain current status with creditors. Because a debt management company works to negotiate lower interest and monthly payments with each creditor, most individuals will see their credit reports updated to "Paid as agreed" within 1-3 months of consecutive monthly payments through the new program.

Debt settlement is a fast and permanent solution to debt problems, but it often requires a lump sum payment in order to satisfy the entire debt. As the name implies, debt settlement allows you to settle a debt at a fraction of the account balance. Depending on the length of delinquency, some debts may be settled for as little as 20% or as much as 80% of the total account balance. When you enter into a debt settlement with a creditor, the account will commonly be reported as "Settled account" on your credit report. Although this is considerably less desirable than "Paid as agreed", it shows that you have made a good faith effort to repay the debt in accordance with your ability. At the same time, a notation of a settled debt is much better than continued late or missed payments or, in extreme cases, even bankruptcy.

Once a debt settlement agreement has been reached and paid in full, the lender will "forgive" the remaining balance on the account. In some instances, depending on the amount of forgiven debt, some lenders may issue an income form to both you and the IRS. This means that a portion of the debt may be considered as income and, therefore, may be taxable.

Once you begin to fall behind with debt payments, it's important to regain control over your finances as quickly as possible. Not only can a poor credit rating affect your ability to get credit, but it can also hinder the potential for future employment. Today, many employers perform a credit check on their new employees and it can make a great deal of difference whether you attempted to rectify your financial problems or just ignored them. At the end of the day, the best way to handle budget woes is to face them with the knowledge that there are options to getting out of debt.

Freedom Debt Relief Offers 5 Tips to Help Consumers Avoid Becoming Victims of Identity Theft

SAN MATEO, Calif., Nov. 21, 2017 /PRNewswire/ -- As travel and online shopping ramp up during the holiday season, the risk of identity theft grows as well - and these common crimes can result in increased cost of debt for people who do not catch the ...

Published:  Tue, 21 Nov 2017 03:00:00 GMT



Saving Somalia Through Debt Relief

Somalia needs humanitarian aid to stem its short-term suffering, but that cash will not break the country's deadly cycles of drought, hunger, and poverty. To do that, the IMF must forgive Somalia's crushing debt, just as it has for nearly every other ...

Published:  Thu, 16 Nov 2017 15:00:00 GMT



Browne calls for Paris Club debt relief

Yesterday, Prime Minister Gaston Browne seized an opportunity to call on the Paris Club group of lenders to grant his country some breathing space on its debts, as the nation looks to recover from the devastation wreaked by Hurricane Irma in September.

Published:  Mon, 20 Nov 2017 16:00:00 GMT



China makes no offer of debt relief for Venezuela

BEIJING - China isn't offering debt relief to Venezuela but says it's confident the country can deal with the matter. The statement Thursday from the foreign ministry came a day after Russia and Venezuela signed a deal in Moscow that envisages Venezuela ...

Published:  Thu, 16 Nov 2017 03:58:00 GMT



The Trump Administration Has Yet to Approve a Single Student Debt Relief Claim

For-profit college magnates Corinthian Colleges and ITT Technical Institute shuttered operations in recent years after facing state and federal investigations into fraudulent and predatory practices. After the school chains closed, tens of thousands of ...

Published:  Thu, 16 Nov 2017 01:28:00 GMT



Freedom Debt Relief Suggests 8 Steps To Aid Financial Recovery From Disasters

SAN MATEO, Calif., Nov. 17, 2017 /PRNewswire/ -- This year, more Americans than ever are dealing with the aftereffects of fires, floods, hurricanes, accidents and acts of violence. Plus, the season of snowstorms and blizzards is not far away. For people ...

Published:  Fri, 17 Nov 2017 03:00:00 GMT



Debt Consolidation Reviews: Top 10 Jungle Warns That Household Expenses Are Driving the Debt Boom

Top 10 Jungle produces debt consolidation, debt relief and personal loan comparison charts for consumers and small business nationwide. DALLAS, Nov. 11, 2017 /PRNewswire/ -- Top 10 Jungle, a leading provider of slick digital content and online product and ...

Published:  Sat, 11 Nov 2017 06:19:59 GMT



Tips to Save Money With the Groceries Shared by National Debt Relief

Saving money while doing the groceries for the family might be challenging but it is possible according to National Debt Relief. The article titled 'How To Save Money On Groceries Family Style" released November 13, 2017, aims to help consumers save money ...

Published:  Mon, 20 Nov 2017 00:09:00 GMT



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