Debt Consolidation Versus Debt Negotiation

Debt consolidation versus debt negotiation are two options that are available to you if you need debt assistance. When your monthly bills become too much for you to handle, it makes sense to use debt consolidation or debt negotiation for solving debt and credit problems.

Debt Consolidation

Debt consolidation services have prearranged debt repayment plans with most credit card and collection companies. When you sign up with a debt consolidation company you are offered a lower overall monthly payment based on a lower interest rate they have arranged with the creditor.

This payment is lower than what the credit card companies offer you, saves you money every month and is often the best way to consolidate debt.

One benefit of a debt consolidation repayment plan is it will stop you from getting harassed by your creditors as long as you make the new, lower monthly payments.

The downside of the debt consolidation repayment plan is that you have to cancel all credit cards that you include in the plan. You are also charged your first payment you make toward the program and an additional monthly administration fee. This administration fee ranges from flat fees of $10-$50, while others charge a $5 fee for each creditor. That means you'll pay about $30 a month that doesn't go to paying off your debts.

The debt consolidation program benefits you if you have high interest rates or have higher credit card bills than you can manage. Some people like to make only one payment to one company for all of their debts.

Debt Negotiation

Debt negotiation is sometimes referred to as debt settlement. This is most often offered to people who can't handle a debt consolidation program. If you can't make the minimum payments of a debt consolidation repayment plan or haven't made payments in the past 3 months, a debt negotiation program is the next step for solving debt and credit problems.

One benefit of a debt negotiation program is you stop making payments to your creditors. The debt negotiation company either takes monthly payments from you and keeps it in an account, or lets you keep the money in your own account.

While you are making these monthly payments to the debt negotiation company, they negotiate with your creditors for a lower payoff of around 40-50% of your total amount of debt. Once the negotiated settlement is agreed upon with your creditors, the debt negotiation company makes a one time payment to them.

A downside of the debt negotiation program is it lowers your credit score for as long as you are in the program. However, most debt negotiation companies require the creditor make the credit report show paid in full so it doesn't show up as a negative on your report once your account is settled.

Some debt negotiation companies include a credit repair service that will remove the negative items caused by the debt negotiation program. You pay for this service as part of their program.

Now that you have an idea what debt consolidation versus debt negotiation is choose which one will work best for solving debt and credit problems for you.

Copyright © 2005 Credit Repair Facts.com All Rights Reserved.

This article is supplied by http://www.credit-repair-facts.com where you will find credit information, debt elimination programs and informative facts that give you the knowledge to correct your own credit and credit report. For more credit related articles like these go to: http://www.credit-repair-facts.com/article s_1.html

In The News:


pen paper and inkwell


cat break through


Credit Counseling ? Signs That You May Need Help

Credit counseling is a viable option for those who are... Read More

Credit Card Debt & the Unfairness of the Universal Default Clause

Let's look at a real world example: A woman purchased... Read More

Student Loans Can?t Be Swept Away Through Bankruptcy

Bankruptcy is in the news these days, as Congress has... Read More

How to Protect Yourself: Debt Collections

So you are getting collection calls? You're desk is full... Read More

Questions to Ask a Credit Counseling Service about Debt Relief

Debt relief is a topic on a lot of consumers'... Read More

Debt Elimination

If you're reading this article right now I'm sure that... Read More

Taking The Plunge Into Bankruptcy

Bankruptcy is one of the most difficult things a person... Read More

Credit Card Debt Elimination

Credit card debt elimination can be done with a good... Read More

Secrets to Why Debt Reduction is So Vital for Your Financial Health

Living with debt is never a good idea if you... Read More

The Credit Card Debt Termination Scam

"Legally terminate credit card debt! You can be debt-free in... Read More

Save Money When Going Out

It seems as though whenever we go out for the... Read More

Is There A Way Out Of Your Debt Problems?

Do you have multiple debts? Do you have just one... Read More

Debt Relief with this Simple Formula

Is there a way to get out of debt without... Read More

5 Ways to Get Out of Debt

It has been said that everyday more and more people... Read More

Debt Collectors; And what you can do to Get Them Out of your Life

FTC opinion letter on validation Section 809(a) of the FDCPA,... Read More

Free Quick and Easy Money Saving Tips ? Part 1

With the high cost of gasoline and the amount of... Read More

Getting Past The Idea Of Budgeting & Saving Money

I'm sure you'll agree that budgeting, saving money, and eliminating... Read More

Your Ticket Out of Debt Relief

If you are in debt over your head and wondering... Read More

Corporate Debt Management ? Perspective on the Why

Entrepreneurs have a tough time in their formative years. They... Read More

What is Debt Settlement?

Debt settlement is the process of negotiating with your creditors... Read More

Should You Invest In Savings Or Payoff Your Debts?

I have faced this financial question 8 years ago and... Read More

Bankruptcy Reform: Designed to Protect Big Business

Who will benefit from the new bankruptcy reform laws? The... Read More

Eliminating Credit Card Debt

The overwhelming task of eliminating your debts can often seem... Read More

Debt Consolidation and Personal Finances: Learn the Truth!

An inability to manage credit, growing debt and bankruptcy are... Read More

The Debt Free Lifestyle

Many people have been taught that you cannot get ahead... Read More

How to Negotiate Debt Settlement

People over extend themselves financially as a result of a... Read More

Learn The Five Key Debt Reduction Steps You Must Take Immediately!

Step 1. The purpose of this first step is to... Read More

Credit Card Debt Freedom is Possible

Credit card debt have you drowning financially? You're not alone.... Read More

How to Reduce Your Debt in 5 Easy Steps

If you have incurred substantial personal debt, consider these options:... Read More

Bankruptcy: What You Need to Know

Personal bankruptcy is a legal way to give people with... Read More

Ten Ways to Get Out of Debt

1) Use your AssetsIf you have assets with some significant... Read More

How Do You Spell Debt Relief?

Of all the problems possible in a marriage, finances cause... Read More

Eliminate Your Credit Card Debt, But How?

Can a debt consolidation loan eliminate your credit card debt?... Read More