Debt Settlement compared to debt consolidation and credit counseling
Below is a synopsis of an article on debt solutions published on SingleMindedWomen.com. The beginning of the article describes Debt Consolidation and Credit Counseling. It also details why these options are better than a bankruptcy filing. The attorneys I represent specialize in mortgage modifications and debt settlement; knowing full well that bankruptcy is an absolute last option. To make a long story short, if the consumer owes more than $10,000, debt settlement is most probably the essential option.
Debt Settlement
A newer program and method of debt relief that has been gaining in popularity and getting much media attention of late is known as debt settlement. The program differs greatly from debt consolidation. For starters unlike debt consolidation which simply seeks to gain a lower monthly payment with a lower interest rate and/or extended payment terms, debt settlement works to actually reduce the principal that a consumer owes.
Here’s how it works. A cosumer will authorize a debt settlement firm to negotiate on her behalf with her creditors. Also known as debt arbitration or debt negotiation, this type of program can typically achieve reductions of debt as high as 50% to 75% off of the original amount(s) owed. What is even more amazing is that this reduction in debt is achieved without all the harmful effects of a bankruptcy filing.
Debt Relief Takes Time
Even a debt settlement program however takes time to complete and to eliminate one’s debt. Consumers in debt need to realize that their personal credit card debt issue did not arise overnight; it grew over time, typically several years. And it will take a few years to complete any debt relief program. The good news is that there are indeed many programs in which those who are struggling with credit card debt can use to their advantage beginning with today.
Bankruptcy at first glance may sound like an answer to a consumer’s financial predicament, yet there are serious consequences and repercussions to a bankruptcy filing. These include:
•Destruction or implosion of the filer’s credit record
•Bankruptcy remaining on the filer’s credit record for up to 10 years in some states
•Inability or difficulty to obtain future credit
•Hefty deposits when requesting basic home utilities
•Inability or difficulty to rent an apartment in one’s own name
•Possibly being passed over for a job – as more and more employers these days conduct credit checks as part of their routine job applicant screening process.
Read it here
