Debt settlement or consolidation - What are the major differences between the two?

Hi Curlycarl,

Welcome to the debt consolidation forum.

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Does being enrolled with a debt consolidation company and making monthly payments faithfully give a better credit report than enrolling in a debt settlement company?

Yes, debt consolidation is much better from debt settlement. Sometimes people are not able to afford the payments set in the consolidation plan, and hence because of this reason, they likely enroll in a settlement plan. You may try negotiating with the creditor for a fair reporting with the bureaus. Your credit will look good if the account is not marked as "Settled" or "Settled in Full"

what is difference between debt settlemnent and debt management

how is fees calculated

I have serious credit card debt, serious payday loan debt, and I still owe about 2,000 on my car and that has been sent to a collection agency. I make decent money at my job, but the pay day loans have me so backed up with interest and I have to keep taking them out over and over and then more that I can't get ahead of them. All of my bills are suffering and my car doesn't even run now and it needs major work. What is my best option? Can all of these be included in debt management or settlement?

I thought Debt Consolidation was a loan.

If I only have one credit card and a balance of 12,000.00 but
I can't afford the monthly payments and I don't want to
not pay the bill what is the best solution for me?

I would like to know also. I have $20,000 on one cc and will not be able to afford min payments. What is best option?

I have close to $100,000 of debt through credit cards, hospital bills, and car notes. I am drowning in bills that can't be paid. What can I do?

I am unemployed and borrowing from one card to pay another only works for so long. I signed up with a Debt Settlement Co. Who will help me file a chapter 7 if I cant afford the payment to them. My debt is soo high it is overwhelming. Debt consolidation wont work for me and I need to get rid of this debt. Still looking for work. I know my credit score will suffer, I caused this. I am willing to live with that, I have been thru one bankrupcy and I dont want to go thru that route. According to the law to file for B.R. You have to have proof you tried to pay off your debt, thru debt consolidation for 6 mo. In Illinois. This was my best option for me. Debt Validation of America was my choice.

can I get a payment reduction and later when in a postion
offer to settle?

Will debt consolidation and debt settlement reduce credit scores and stay on our public records ?

Debt Settlement is a program that take approx 2-4 years and only requires you to pay back 40% of your debt. Ig you have any questions give me a call xxx-xxx-xxxx
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Dude, you can't advertise here. - Uncle Wulf

Haha debt man, he is a perfect example of a slimy salesman who is clearly desperate for money because hes on a discussion forum trying to sell. I also offer settlement however, I am going to make key points that will further help you make a decision. Also I will construct rumors of debt settlement versus myths also with counseling or consolidation.

First off debt settlement AND credit counseling (consolidation) will have an effect on your credit. Debt settlement which i will now refer to as DS has a direct effect on your score becuase the payments that you are now making are not submitted to your lender on a monthly basis. The debt will fall in the charge off stage or collections (it sounds horrible right? well not when you are already 4 months late ) With debt consolidation or DC there is no direct effect on your credit score HOWEVER, on your credit report under public inquires you will have a record showing proof that you are in DC which in some cases will hurt your chances of getting a loan. What a lot of people need to realize is that there is much much more to your credit than just your score. For instance, if you are renting out a condo and you have two buyers ready to take you on your offer, One of them has a 720 FICO (credit score) and is current with his bills but has a womping 75% debt to income ratio versus a person who has a fico of 650-670 has a few late payments on his credit from when he was younger but now has a clean 25% debt to income ratio, who would you rather go with . I know i would entrust a man who has a better chance of paying me on a monthly basis versus the man who has to chose which lender to pay for the month. That is just one philosophy though which most of you will probably ignore due to arrogance. The fact of the matter is that enrolling for these programs will have an effect on your credit, and usually will increw a fee. HOWEVER the fee in comparrison to making the minimum payment on your debt is absolutely nothing. Here is an example:

You owe $10,000 between 2 cards with rates of 15% and making minimum payments of $430, you have recently lost your job had some sort of reducded income or flat out have just been making the minimum payments and are currently just racking up a higher balance until it peaks the limit. Now at the thought going with DS and falling behind makes you nervous but realistically makes sense. Just measure it (do this for cards you actually have and you can see where your money is going)

Take the time you have been paying on the card (1 year = 12 months etc.)
Multiply by the amount of your payment (if you have been making payments of $350 which is an average payment for 10k)

And come out with your solution
24 x 350=$8400 dollars spent in the last year towards your credit card and you still owe near the full balance if not more.

with DS the equation is
23x350=8050 and best part is Your actually debt free, not oweing an additional 8 or 9 or 10 k.

Settlement Clearly has it's benefits, everyone is just wrapped around their credit score and it being above par. But if you're having trouble with debt your credit shouldn't be your first concern because it will be the thing to bury you into the ground until it is effected.

And people please stop thinking that making the minimum payment is giving you good credit. I mean come on, your lenders will give you a pat on the back for keeping there lights on and giving jonny his bonus, but no one is going to give you a loan with that type of payment history. Also the main use of credit is to extend it, buy a car or a home. NO ONE wants to give someone in debt a loan. Is that not the most logical thing you've heard all day. If you owed me $10 and came up to me asking for another $20, i'd look at you crazy and charge you interest on the 10. Do your research there is alot more to credit than just your score. As you can tell i run into a lot of arrogance regarding there score and the situation : ). It is made for specific situations if you are a person who can afford double the minimum payment NO KIDDING settlement will kill your credit. Going from superb payments down to not paying obviously is not smart. It is made for people who are on the break of falling behind, have fallen behind, or have to chose between paying the credit cards or providing food for the family. If you dont fallinto that category then its not worth it.

Credit counseling will help you reduce your rates and bring you concurrent if you can afford it. Generally your payments will remain the same or in some cases increase which is usually uncomfortable on people because they have to remain on that payment for several years. It is made for people who have high rates but can back up the payments.

I hope i helped if you do have additional questions feel free to email me at xxxxxxxxxxxxxxxxxxxxxxxx and i will be more than happy to help you out.


You can't advertise here either, Anthony. - Uncle Wulf

Here's the thing that I see thrown around so often is the claim of % of repayment. Maybe its 40%, maybe its 50%, maybe its 70%; you never truly know. In most cases its safe to say you can settle for 50% of the debt, but sometimes a creditor may want more. I use a processor that currently experiences 38% settlement which is great. You never know for sure and that is important to point out.

Its usually best to separate your budgeting with envelopes and organize yourself that way. Get out of the habit of using your credit card for everything. That's how you get into trouble in the first place by not watching actual cash being handed out. When you just see a price and give a signature its so much easier now, isn't it?


I love to hear success stories of people getting out from under the strain of crazy credit card debt.

consultant anthony:
With a negotiated debt settlement isn't it possible to have the creditor record the debt as paid in full rather than "settled" thereby preserving the clients credit rating?
I know many creditors may be unwilling to do this, but it's my understanding that it is possible?

(Link Removed by Shazzers as solicitations are against TOS rules)

Link removed. Please read TERMS OF SERVICE for a more detailed description regarding advertising. Shazzers

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Here's the thing. You can read all the documents on this website and learn about trying to settle your debts yourself, or you can contact a professional. If you fill out a form on this site, they put you in contact with a law firm. Debt Management Guys does the same thing. Its just a matter of your comfort level.

The question is, do you have income ?

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my personal best option was settlement i would have never been able to swing the other payment plan for 5 years. under settlement it was a guess at 2 years and i could barely pay that and sometimes they would be understanding and let me only do a half payment or something. settlement was my god send now im busy trying to restore my score. even though these stupid % hikes here lately and reducing limits have hurt me once again. I swear its a never ending vicious cycle

if you would like to give your advice about credit repair, there is a section in here for just that. you would be better off to post it under the catigory repairing credit. but its in your best interest to become a member instead of a guest.

Debt Settlement can be quicker; however, it will affect your credit score. With a debt consolidation program, you will improve your score over time because you're continuing to make payments under a structured plan.

Joseph
[URL="http://www.lincolndebtrelief.com"][/URL]

Careful People. When you make a settlement with a creditor... let's say that you are $5000.00 in the hole and they agree to accept $1500.00 as paid in full...they can report the $3500.00 balance to the IRS and they count that as income which then means you owe taxes.

If you think that your debts are becoming unbearable, try to seek professional help immediately before it makes matters much worse.

in deep, in fact that is true, but most people that need settlement qualify for a simple irs form while doing thier taxes that prove to be exempt to paying that debt owed to the irs. form 982. and you wont owe the irs a thing.

Well, I don't know whether this is the right section to post in.However, I'm new here but I would like to say that it is a great thing you guys have going here.I simply love it!Thanks for so much information you guys have imparted.Thank you.Regards,CJ,

This is some of what the FTC has to say about debt relief:
"Turning to a business that offers help in solving debt problems may seem like a reasonable solution when your bills become unmanageable. But before you do business with any company, check it out with your state Attorney General, local consumer protection agency, and the Better Business Bureau. They can tell you if any consumer complaints are on file about the firm you???re considering doing business with. Ask your state Attorney General if the company is required to be licensed to work in your state and, if so, whether it is.
Some businesses that offer to help you with your debt problems may charge high fees and fail to follow through on the services they sell. Others may misrepresent the terms of a debt consolidation loan, failing to explain certain costs or mention that you???re signing over your home as collateral. Businesses advertising voluntary debt reorganization plans may not explain that the plan is a bankruptcy filing, tell you everything that???s involved, or help you through what can be a long and complex process.
In addition, some companies guarantee you a loan if you pay a fee in advance. The fee may range from $100 to several hundred dollars. Resist the temptation to follow up on these advance-fee loan guarantees. They may be illegal. It is true that many legitimate creditors offer extensions of credit through telemarketing and require an application or appraisal fee in advance. But legitimate creditors never guarantee that the consumer will get the loan ??? or even represent that a loan is likely. Under the federal Telemarketing Sales Rule, a seller or tele-marketer who guarantees or represents a high likelihood of your getting a loan or some other extension of credit may not ask for or accept payment until you???ve received the loan.
You should be cautious of claims from so-called credit repair clinics. Many companies appeal to consumers with poor credit histories, promising to clean up credit reports for a fee. But you already have the right to have any inaccurate information in your file corrected. And a credit repair clinic cannot have accurate information removed from your credit report, despite their promises. You also should know that federal and some state laws prohibit these companies from charging you for their services until the services are fully performed. Only time and a conscientious effort to repay your debts will improve your credit report.
If you???re thinking about getting help to stabilize your financial situation, do some homework first. Find out what services a business provides and what it costs, and don???t rely on verbal promises. Get everything in writing, and read your contracts carefully."

If i do the debt settlement program, am I going to be taxed on the reduced amount? Would it be classed as income?

How people's credit record or score gets affected on deb consolidation and debt settlement?

how will debt consolidation show up on my credit reports/history and for how long

that depends on which program you are looking at

hi nelly i am frm india.i dont find any debt consolidation company in india.can u help me.i owe debt for indian rupees 2 lakhs.

Hi,
I am a retired teacher (25years) I receive a pention each month of 2000 dollars and I rent a room in my house for 500 dollars a month. I was also self employed as an artist painting murals and signs as well as printing up ads for local business or groups in the area. But I am about to under go back surgery in the next week as I was injured in a car accident which has left me unable to do the work I was doing to suppliment my income. The surgery I am having done on my back is suppose to get me back to work and take away the constant pain. I do not have health insurance. I am unable to keep up with my bills because I am waiting on a settlement to pay for my huge medical expenses, which I have had to pay out of pocket for a lot of these expenses. I have depleted my savings and lived off my credit cards much more than I ever intended. If I can not work something out soon I will consider going bankrupt. Of course, I'd rather not do this. I own my home. I have about $20,000.00 in credit card debt that I need to get out from under. These card are not too far behind on payments I have kept up on them until the last month. I don't see me being able to pay them for at least six weeks. I will need that time to recover from surgery. Do you do debt Settlement? Are you a member of TASC?
What are your fees?

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Never touch a cc again!
Never vicitmize yourself with a cc again!
Never say that you will never have another cc...just vomit every time it crosses your mind.

Anthony, you're a pseudo-expert just trying to sell your field and services. First of all, your math is wrong. Using your example, $10,000 debt at 15% interest and payments of $350 every month means that debt is done in 28 months, with interest paid of $1,715. Real pros know how to use a financial calculator. Secondly, NO debt settlement company can guarantee a settlement nor can they prevent a client from being sued. You're making assumptions about scenarios that are based on goals, not fact. You CANNOT guarantee that a client will be "debt-free in 23 months" because you don't know what lender will settle for what, or if they will in fact settle at all. You and I both know you've had clients who were sued after they signed up with you. I can tell you for a fact that every banker will look at a CCC in a better light than a 120 day plus late, which is what will be posted if a debtor goes with a DS. You talk about clients being arrogant but the truth is they're rightfully worried about their financial well-being. Arrogance in this case comes from those who dismiss the concerns of people who are desperate and searching for real help.

Could you please explain what type of fee is involved when you use a Debt Relief agency?

I am just starting this process and would like to know what steps that I have to take in order to start clearing out my debt? I want to buy a house. At this point, I can barely rent an apartment!

i just had a person call me with 60k of debt claiming consolidation will take care of the debt at 500 a month for 10 years. this is very crazy to me, for the next 10 years of some ones life they will be paying 500 a month. and that doesnt included fees.
with debt settlement they will save you not only money off the original balance but it will be a fraction of the time, more like 2-4 years depending if you come up with extra funds or not for awesome settlements.
People need to find an HONEST AFFORDABLE place to help with debt.
i dont believe all people are qualified for debt settlement but most are, to avoid BK! especially the fact that BK will still make you pay your debts eventually, whats the point ?
debt consolidation has a 90% failure rate because usually the outcome is for the companies.

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when inquiring about a settlement, how much can one settle for if the is BALANCE of 1,143. 23

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Why haven't you just googled the Debt management guys? Their calls are free and their attorneys have a great relationship with TASC and USOBA. They do more than just debt settlement. Some of their debt management plans have 0% rates.

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any individual could still contact their creditor directly and get the 0% payback - they offer this directly all the time, all you have to do is ask. If you are having a financial hardship and can no longer make your required payments, and you are already behind on your payments (about 180 days or so) - the banks will offer a couple of different programs (in general) - they will offer you a settlement of about .60 to .40ctd (which you can negotiate down if you have the funds available) - if you can't settle; then you could work out a 0% payment plan (interest and penalties would stop and you would pay the entire balance) but, they will usually require that you pay this over no more than a 60 month period or they could offer you a freeze for a 12 month period. The banks will always start with offers that makes them the most money. SO - If you want to stop the calls and get some breathing room while you are working on saving your money so you can eventually settle - help prevent the debt from going to collections or to litigation - ask the creditor if they would be willing to freeze the balance and allow payments over a 60 month period. You can always go back and settle for less when you have the ability to. This strategy isn't the end all cure all - it's just one that you can employ if you feel that is would help your situation out.

That is easier said than done! I think the reason people are on this website is because they haven't gotten a 0% rate or a decent settlement, in most cases. Its the creditors not budging at all and they are looking for hope. I tried a dmp plan before, it works. Its just nice to know exactly what will happen for the most part at the end whether its a debt settlement or a lower rate. I prefer to know. That's what the companies are for.

How do debt consolidation or debt settlment effect your credit scores? What will it say on your credit report?

Is it a bad idea to do debt settlement with the credit card companies myself? I have a very savvy and intelligent constituant who started to and got the "run around" from debt collectors and the credit card companies he initially delt with. He thought he could save money by doing it himself but according to him, it was a frustrating effort. He ultimately choose a reputable company who handled his scenario quickly and efficiently. I'm a little more stubborn and have a little more time on my hands. I don't like the idea of my initial payments going to someone when I could have done it myself.