Function of the debt consolidation program

Hi Suan,

Welcome to the forums.

When a person considers using the debt consolidation program, his consultant contacts his creditors and gets the interest rate and monthly payments reduced by a considerable margin so that the consumer is able to pay it realistically. The consultant often knows the key contacts at the place of the credit companies and works whole heartedly so that the consumer gets the best deal.

Let us take a hypothetical situation where a person is having a debt of $8000 with a major credit card company and the interest is offered at 22%. Considering the advantage of the debt consolidation program, the consultant will be able to lower the interest rate and the monthly payments significantly. A skilled consultant working in the program will be able to reduce the debt by a margin of 40% to 60% and eliminate all the financial charges and the late fees.

Thus, the consumer will not have to pay the insurmountable interest fees in the debt consolidation program and the payment will be going towards what is owed.

The bonus of the debt consolidation program is that you won't have to write numerous checks to your various creditors. You will have to write only one check and that will be in the name of the debt consolidation company with whom you are working. Thus, all the payments are consolidated into one loan amount and the trained consultant will further deal with your creditors in the rest of the program.

You will be sent statements of your monthly payments made to your creditors and thus you will be able to see your debt shrinking each month as it gets paid off.

The benefits of the debt consolidation program have been summarized in the following page which will give you more idea about this program:

http://www.debtconsolidationcare.com/benefits.html

Regards
Roxette

I would like to gather more information if debt settlement is the same as debt consolidation. Thanks

If you are looking to solve your debt related problems, debt consolidation and debt settlement are the two different options by which it can be done. A large number of people consider any of these options when their monthly bills have gone unreasonably higher and it is becoming very difficult for them to pay it off.

Debt Consolidation

In the debt consolidation program, the consultant is responsible for making prearranged payment arrangement plans with your creditors or the collection agencies. This program offers you the benefits of all the bills combined into one loan amount lowering your monthly payments and at lower rate of interest

You will be able to save a considerable portion of money through this program as the creditors will offer you a reduction in the total amount of your debt.
After enrolling in the debt consolidation program, all the harassing phone calls of the creditors and the collection agencies are likely to stop. They will only call you if you miss any of the monthly payments in the program.

All the credit card accounts are closed or frozen which are included in the program. This is done with a neat intention so that you don't build any more debt in those accounts. Otherwise it will seem like chasing a moving target.

This program is beneficial to you if you have high interest rates or have high credit card debts which are becoming very difficult to be managed. This program serves to make only one payment to all the debts that are included in the program.

http://www.debtconsolidationcare.com/benefits.html

Debt Settlement

Debt settlement is also known as debt negotiation. This management program is used by those people who find it very tough to handle the debt consolidation programs. A person who is not able to make the minimum payments of the last three bills takes the services of the debt settlement and gets the account paid off.

The process of this program is that you keep contributing towards your debt in a newly created account. This account can be either with you or with the company that is negotiating with your creditors. Thus, the consumer is not required to pay the creditor instantly in this program.

When your money is getting deposited in this account in easy monthly installments, the consultant negotiates with your creditors for a lower payoff of around 40-50% of your total amount of debt. Once the creditors agree to this negotiation, the debt negotiation company pays off the complete amount to the creditors.

Debt settlement programs hurt the credit ratings of an individual. This is considered to be the very last step before bankruptcy is regarded as the best option and clear off the debt. The advantage of the debt negotiation company at this situation is that the consultant tries to protect the interest of the consumers. He manages to convince the creditors that the accounts will be reported as ???Paid in full??? or ???Paid as Agreed??? in your credit report. The term ???Settled??? is a negative mark and if it appears in the credit report, it is going to stay there for the next 7 years.

There are some credit repair packages which offer that all the negative marks already appearing in the credit report will be removed. Be aware that all such removal of the negative markings has a legal approach and any company assuring this improvement wants to make money by using false techniques.

For a better idea on debt settlement programs, please have a look at this page

http://www.debtconsolidationcare.com/debt-settlement.html

Now that you have an idea about debt consolidation and debt negotiation programs, you can choose any of them which you think will work the best for solving your debt and credit problems.

http://www.debtconsolidationcare.com/decide.html

Regards
Roxette

Thanks for the informative and quick response. There is one more query that occurred in the back of my mind. I was thinking if I have to include all the accounts in the program or can I just select whichever needs prior attention. Thanks once again for the help

You don't have to include all the accounts in the debt settlement program. You can select any of the account which you think requires immediate repair and the consultant will work accordingly. It will be discussed during your free consultation.

Regards
Roxette