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


The First Step To Getting Out Of Debt: Make The Commitment!

These days, getting into debt is easy.Unfortunately, getting out of... Read More

Bouncing Back from a CCJ

Should you be unfortunate enough to face a CCJ ?... Read More

Getting Past The Idea Of Budgeting & Saving Money

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

Craving For Financial Freedom

Have you ever felt trapped in a Rat Race and... Read More

Debt Handling Solutions

Sometimes debt can seem overwhelming. In those instances, or even... Read More

The Road to Debt Relief

Living with debt is not something someone hopes for, but... Read More

IVA: Individual Voluntary Arrangement

What Is an IVAThe IVA (Individual Voluntary Arrangement) was introduced... Read More

Deal with All Your Debts with Care!

Lots of people take a large ammount of loans and... Read More

New Bankruptcy Legislation May Make it Harder to Find an Attorney

The recently passed Bankruptcy Abuse prevention and Consumer Protection Act... Read More

Bankruptcy Interest Increases as Deadline Approaches

Congress recently passed sweeping legislation that will significantly reform American... Read More

New Bankruptcy Law Makes it Harder to Stop Foreclosure

On October 17, 2005 President Bush's sweeping bankruptcy reform law... Read More

What Is A Chapter 13 Bankruptcy?

Many consumers that are bogged down in debt frequently turn... Read More

5 Methods Toward Reducing Your Debt

Decreasing your debt is paramount to having a good credit... Read More

The Effects of Consumer Debt

Consumer Borrowing Consumer borrowing in the UK has now crashed... Read More

How to Get Triple A Credit in 25 Days

Good credit is everyone's dream. A wise use of credit... Read More

Debt Settlement -- Why the Critics Are Wrong

After October 17, 2005, a lot of people are going... Read More

Start Small and Your Wealth Will Get Bigger

We've all heard the phrase, "You have to start somewhere."... Read More

The Credit Card Debt Termination Scam

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

Whatever You Do....Dont Save Money!

No, that's not a misprint. Even though falling interest rates... Read More

The Last Debt Solution Should Be Bankruptcy

A debt solution like bankruptcy should really only be used... Read More

Repair Bad Credit Yourself

In March 2005, the U.S. financial services industry succeeded in... Read More

Two Ways To Debt Relief

There are many debt relief programs out there both off... Read More

The Human Side - Debt Stress

In all the technical discussion you hear about credit... Read More

Bankruptcy Abuse

Bankruptcy is little more than a smack on the hand... Read More

The New Bankruptcy Law -- How Will It Affect Debt Negotiation?

In April 2005, Congress made sweeping changes in U.S. bankruptcy... Read More

4 Simple Ways to Solve Your Debt Burden

Getting Behind Getting behind on your debts owed can be... Read More

Is Filing for Bankruptcy an Option for You?

Bankruptcy laws give debtors a way to resolve debt by... Read More

Should You Invest In Savings Or Payoff Your Debts?

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

Help to Get Out of Debt

Debt Help is the stepping stone to debt elimination and... Read More

Bankruptcy - Is It The Right Choice For You?

Bankruptcy is one of the tougher choices we as adults... Read More

Learn The 15 Debt Elimination Steps You Must Take Immediately!

What Everybody Needs To Know...Learn The Truth About Debt Elimination... Read More

Is Independence Overrated?

Happy Independence Day from The Money Motivator!If you don't celebrate... Read More

Save Money When Going Out

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