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

---

What is Bankruptcy?

Here is a useful guide to bankruptcy. It should be... Read More

Your Secret Weapon... A Budget

For many, the word 'budget' immediately sends shivers down the... Read More

How to Avoid Bankruptcy

Bankruptcy is a legal way to offer folks with high... Read More

Selecting A Credit Counselor; Asking The Right Questions.

When you find yourself thinking about using a credit counseling... Read More

What is Debt Settlement?

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

Debt Recovery Can be Easy

OK, so you are up to your head in debt.... Read More

Two Ways To Debt Relief

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

Debt Settlement -- Why the Critics Are Wrong

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

What is Bankruptcy?

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

How To Avoid Medical Collections

With medical collections costing doctors millions upon millions of dollars... Read More

Start Small and Your Wealth Will Get Bigger

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

Debt: Dont Pay Your Minimum Balance

Almost all Americans carry credit card debt. Actually, over 40%... Read More

Think for a Change

I'm not sure where it originated, but I've heard it... Read More

British Families and Debt

There is current concern from the Bank of England that... Read More

Purchase Your Future Now While It Is Still Inexpensive

Leaving school, getting a new job, or even a raise... Read More

Personal Bankruptcy ? If Its Unavoidable, File Now

The Bankruptcy Abuse and Consumer Protection Act, signed into law... Read More

Different Ways Of Dealing With Debt

Bills, creditors, debt collectors. Are you yearning for the days... Read More

Debt Elimination Is The Key to Financial Freedom

If you want financial freedom, the first thing that you... Read More

Debt Settlement

What is debt settlement?Debt Settlement is a process to settle... Read More

Bankruptcy - The Easy Option?

Incredibly, since the changes in the bankruptcy law in April... Read More

Do It Yourself Debt Relief

With mounting bills and unforeseen hardships, you may be considering... Read More

Bankruptcy As An Option

If your financial worries are preventing you from sleeping at... Read More

Currency Trading Fee Concept

Troubles with Global Economy; Do you see future problems with... Read More

Corporate Debt Management ? Perspective on the Why

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

Should You Join a CCCS - Consumer Credit Counseling Service for Debt Relief and Financial Freedom?

Do You Need to Join a CCCS - Consumer Credit... Read More

Is Independence Overrated?

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

Credit Card Debt Elimination

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

Slowing Spending - The Key To Your Debt Plans Success

Anyone who embarks on a debt reduction program should know... Read More

What Is A Chapter 13 Bankruptcy?

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

How to Negotiate Debt Settlement

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

Christian Debt Consolidation ? Feel Comfortable About Managing Your Debt

Many Christians feel uncomfortable with the notion of being in... Read More

Bankruptcy Interest Increases as Deadline Approaches

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