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      December 10, 2018

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Related Articles

Benefits of Debt Settlement

Debt Consolidation vs Debt Settlement

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What Is Debt Consolidation?

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What To Do if You're In Debt

 

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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.

Why, When, Who The Important Questions About Debt Consolidation

Getting started on the debt-consolidation journey requires asking a few important questions: 1. Why should I use debt consolidation 2. When should I use debt consolidation There may come a time when ...

Published:  Sun, 09 Dec 2018 06:05:00 GMT



Sonoma County executive arrested for student loan debt relief scheme

A Rohnert Park CEO is accused of operating a fraudulent student loan debt relief scheme. He's expected to be in court Monday. Authorities arrested him at SFO Wednesday as he was headed to Cancun ...

Published:  Fri, 07 Dec 2018 18:42:00 GMT



Do You Qualify For Debt Relief

In earlier posts, we've devoted considerable time and energy to discussing common debt related terminology. We've discussed terminology associated with debt consolidation, for instance.

Published:  Thu, 06 Dec 2018 11:03:00 GMT



Tips To End The Year On A High Note Shared By National Debt Relief

There are a number of consumers who are trying to end the year right that is why National Debt Relief shares tips to accomplish that. The article titled "How To End 2018 With Your Finances On A High N...

Published:  Thu, 06 Dec 2018 15:06:00 GMT



Settlement to provide $1M in debt relief for Arizona consumers

Arizona Attorney General Mark Brnovich, along with his counterparts in 41 other states and the District of Columbia, reached a settlement with California-based Encore Capital Group Inc. to reform its ...

Published:  Tue, 04 Dec 2018 13:23:00 GMT



Tips For A Budget-Friendly Holiday Party Shared By National Debt Relief

Christmas is fast approaching that is why National Debt Relief shares some valuable tips on how to organize a cost-efficient holiday party. The article titled "Host A Budget Friendly Holiday Party Wit...

Published:  Sat, 08 Dec 2018 07:01:00 GMT



Debt Consolidation Guide

Whether you're drowning in credit card debt or scrambling to pay student loans, debt consolidation can help get your finances back on track. By combining several debts into one, you may be able to red...

Published:  Fri, 30 Nov 2018 12:30:00 GMT



Affordable Winter Travel Destinations Shared By National Debt Relief

A lot of people are eager to get on a vacation during winter that is why National Debt Relief shares some tips to do make it an affordable plan. The article titled "Best Winter Travel Destinations For ...

Published:  Fri, 30 Nov 2018 07:09:00 GMT



Sonoma County finance executive arrested in $28 million student debt relief scheme

The "Follow This Story" feature will notify you when any articles related to this story are posted. When you follow a story, the next time a related article is published - it could be days, weeks or m...

Published:  Fri, 07 Dec 2018 07:45:00 GMT



Executive arrested in $28M student loan debt relief scheme

SAN FRANCISCO (AP) - An executive charged with bilking consumers out of $28 million in a student loan debt relief scam has been arrested in San Francisco. The U.S. attorney's office says ...

Published:  Thu, 06 Dec 2018 19:47:00 GMT



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