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      April 21, 2018

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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.

EU, IMF mull Greek debt relief; no talks on bailout extension

WASHINGTON (Reuters) - The euro zone and International Monetary Fund are discussing options for future debt relief for Greece at meetings this week in Washington, but are not considering any extensions of the Greek bailout, top euro zone officials said on ...

Published:  Thu, 19 Apr 2018 13:29:00 GMT



Debt settlement plan: 5 questions to ask before resorting to this option to pay off bills

That's often the case for those thinking about debt settlement, where a company provides debt relief by negotiating with your creditors to accept lower payments. Choosing this option can come with pitfalls and should be a last resort if you need help ...

Published:  Wed, 18 Apr 2018 08:12:00 GMT



FTC settles with 3 marketers who allegedly sold phony debt relief services

WASHINGTON (Legal Newsline) - The Federal Trade Commission (FTC) announced April 12 that three marketers have been banned from selling debt relief, credit repair and financial products and services after allegedly selling phony debt relief services.

Published:  Fri, 20 Apr 2018 09:33:00 GMT



A Debt Crisis Seems To Have Come Out Of Nowhere

What about that massive debt forgiveness for 36 countries that you helped broker back in the 1990s - the "debt relief" campaign made so famous by celebrities like the rock star Bono. Wasn't that agreement supposed to end debt crises like these once and ...

Published:  Fri, 20 Apr 2018 12:24:00 GMT



Greek debt relief on agenda for Washington talks - German official

BERLIN, April 17 (Reuters) - The International Monetary Fund (IMF), the European Central Bank and euro zone finance ministers will discuss measures to ease Greece's debt burden once its bailout expires in August in Washington this week, a senior German ...

Published:  Tue, 17 Apr 2018 05:46:00 GMT



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