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Just need a little assistance getting my facts straight here. Have spoke with both consolidation companies and settlement companies. My situation is extremely high credit card debt (40,000). Consolidation requires that I pay off all the debt and maintain good credit correct? And a company can do this for me, lowering the interest rate and so long as the payment is made every month my credit will remain intact. But I have to give them the money and the fee is minimal.

Settlement will reduce the amount I pay by 40 to 50% but I have to pay the settlement company approx 15% of the total debt reduction. And my credit will be trashed. Plus I'll have to claim the reduction amount as income on my taxes.

In my situation I am going from a working environment with unlimited possibilities for income to a fixed retirement income. My retirement will cover my house and car payment. I can't get credit cards anymore because I'll never be able to afford the payments, so if my credit is trashed that shouldn't make a difference. Yet I'll be paying far less on the cards than if I did the consolidation, which would be a struggle to keep up with the payment that I would have to make to them. And I never would have seen this happening, otherwise I never would have used the credit cards.

So which would be the better solution and what issues am I not considering in making this decision?
Thanks..

Posted: Fri Oct 14, 2005 1:44 pm Subject:

MsMistchf,

As I have stated in my previous post, leave the consultant to do the best negotiation for you with the creditors. But he should ensure that your creditors report your accounts to the bureaus with the remark 'paid in full' or 'paid as agreed'.

Consolidation or settlement programs reduce the total amount of your debt but the most important thing is the remark that will appear in your credit report. Your file should not have 'Settled' term otherwise this negative remark will stay for the next 7 years.

Your credit report is the most important and prestigious financial document and you and your consultant should ensure that it gives a good view towards your identity.

Regards
Roxette

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Debt Consolidation vs Debt Settlement..which is better?

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