A careful step towards debt settlement
Date: Thu, 11/18/2004 - 03:19
debt settlement is a process through which people settle their debts. The debt can be termed as "settled" only when all the debt amounts are paid off. Basically there are two financial institutions that look after the settlement of debts. They are debt consolidation firms or debt management firms. It could be credit card related debts or personal debts.
How do these financial institutes operate?
Debt consolidation firms chalk out a repayment scheme with affordable interest rates, which is much lower than what the credit card companies offer. These firms also provide you with a lower interest loan and give you free debt advice. These debt consolidation loans are not settled loans and really make life easier for a person who is deep down in debts. During such crisis moments, the debt burdened person finds himself much better positioned with the assistance of a debt consolidation loan. He gets quite a firm hold on the situation and in majority of the cases is successful in getting himself free of debt.
However, there are a few guidelines one must follow before getting involved with a debt consolidation loan.
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It is highly advisable to read the fine print before entering into a consolidated loan.
One must also confirm that there is no service fee associated with the loan.
One should also try to understand the firms penalty structure. In many cases, there are some hidden fees and late charges. Some firms have the habit to penalize you for being late on a payment. This is done by hiking up the interest rate to a great extent. Such type of firms should be avoided.
Debt management firms also offer debt settlement plans. They negotiate with the credit card companies for lower interest rates. In most cases, they are successful in convincing the credit card companies for they offer them better repayment plans on behalf of all their clients. In return for this help, the debtor however has to pay back the debt management company instead of the credit card company. They pay the debt management companies in easy monthly installments. This payment is done on the basis of revised rates set by the debt management company.
Like debt consolidation firms, one must also read the fine print when dealing with debt management firms. These firms also have the record for charging heavy service fees and not always successful in delivering better financial strategies. Such notorious firms must be avoided.
Although there are many companies under these two categories that help clients in debt settlement, their reputations sometimes are not all that clean. It is thus best to look out for a reputed agency and have a deep knowledge of their company policies before depending on them for settlement of debts.
How do these financial institutes operate?
Debt consolidation firms chalk out a repayment scheme with affordable interest rates, which is much lower than what the credit card companies offer. These firms also provide you with a lower interest loan and give you free debt advice. These debt consolidation loans are not settled loans and really make life easier for a person who is deep down in debts. During such crisis moments, the debt burdened person finds himself much better positioned with the assistance of a debt consolidation loan. He gets quite a firm hold on the situation and in majority of the cases is successful in getting himself free of debt.
However, there are a few guidelines one must follow before getting involved with a debt consolidation loan.
[list=1]
Debt management firms also offer debt settlement plans. They negotiate with the credit card companies for lower interest rates. In most cases, they are successful in convincing the credit card companies for they offer them better repayment plans on behalf of all their clients. In return for this help, the debtor however has to pay back the debt management company instead of the credit card company. They pay the debt management companies in easy monthly installments. This payment is done on the basis of revised rates set by the debt management company.
Like debt consolidation firms, one must also read the fine print when dealing with debt management firms. These firms also have the record for charging heavy service fees and not always successful in delivering better financial strategies. Such notorious firms must be avoided.
Although there are many companies under these two categories that help clients in debt settlement, their reputations sometimes are not all that clean. It is thus best to look out for a reputed agency and have a deep knowledge of their company policies before depending on them for settlement of debts.
