TopConsumerReviews.com is a world-leading consumer product review site. We provide detailed reviews and ratings for thousands of products and services.
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.
Top Consumer Reviews Articles
TopConsumerReviews.com provides unique articles that you won't find anywhere else on the internet. These articles are designed to help you make the most informed decisions possible.
Debt Relief In The News
ANNAPOLIS, Md. (AP) - Gov. Larry Hogan is announcing some initiatives aimed at making college more affordable and easing student debt. Hogan made the announcement Monday at the Universities at Shady G...
Published: Mon, 16 Jul 2018 13:36:00 GMT
As a young high school graduate, Joseph Schettler had dreams of working for the FBI or becoming a forensic psychologist. He took steps to make those dreams a reality. Schettler became the first person ...
Published: Wed, 11 Jul 2018 13:25:00 GMT
Having a wedding is an exciting event in any couples life but it is also one of the most expensive that is why National Debt Relief aims to shares some cost-cutting tips. The article titled "How to Do ...
Published: Fri, 13 Jul 2018 09:12:00 GMT
Sign in or subscribe for access to peerless insight & analysis, curated data & interactives, and networking events.
Published: Thu, 12 Jul 2018 06:58:00 GMT
There are more and more consumers who are taking out loans for various reasons that is why National Debt Relief shares some of these loan needs. The article titled "How Loans Are Being Used To Cover M...
Published: Sun, 15 Jul 2018 10:05:00 GMT
(PRLEAP.COM) July 15, 2018 - Retirement is a part of every person's life whether they like it or not that is why Debt Consolidation USA aims to help consumers identify some potential problem areas in ...
Published: Sun, 15 Jul 2018 00:06:00 GMT
There are a lot of consumers who understand the importance of having a household budget and National Debt Relief aims to help people plan better for it. The article titled "4 Expenses To Never Sacrifi...
Published: Wed, 11 Jul 2018 09:40:00 GMT
- View Full Site -
Reproduction in whole or in part in any form without the express written consent of TopConsumerReviews.com, LLC is strictly prohibited.