Debt Programs

When it comes to seeking debt help many Americans don't know the difference amongst the available programs.

Knowing every specific detail of the debt program you choose will help your success in the program. The main debt arbitration programs are debt settlement / debt negotiation, debt management / consumer credit counseling services, and consolidation loans. So what are these programs, and how do they help and hurt me? Good question!

Any, and every debt program will negatively harm your credit, some much worse, and much better than the other. To help users distinguish which debt program would suit their needs Debt Counseling Services will explain why each debt program Helps, Hurts, and then we'll tell you How we've come to this unbiased conclusion based solely off facts.

Debt Negotiation - Debt Settlement Programs

Intro - Debt settlement and negotiation programs are sprouting up everywhere, even ex-bankruptcy lawyers are converting to debt negotiation, that alone must tell you something. Perhaps bankruptcy isn't such a good idea, thats why debt settlement and negotiation serve a serious purpose for American's motivated to get out of debt without falling into the unforgiving hands of bankruptcy.

Helps - Lower payments, debts settled-negotiated-paid off for less (average payoff - 34-40% of the original balance). So if you racked up 10,000 dollars on a visa credit card your debt (on average) would be settled for $3,400 - $4,000.

Hurts - These programs hurt your credit score while enrolled, but have the fastest healing time once the program ends.

How - Payments are made into an FDIC trust account made by the client, or debt settlement / negotiation company. Cease and assist letters are sent to the creditors stating your existence in a hardship program (in this case being debt settlement - debt negotiation). How the company settles your debt may have minor differences but generally the company will approach 1 creditor / account at a time.

Consensus - Besides bankruptcy you save the most, your credit score is affected far less than bankruptcy as well. Your credit score is worse than credit counseling while enrolled but the healing time is faster once the program is completed.

Consumer Credit Counseling Services - Debt Management Programs

Intro - Credit counseling and debt management have been around for decades, and these forms of debt relief are considered the pioneers of the debt arbitration industry.

Helps - Credit counseling agents enroll consumers (if eligible) in whats known as a debt management program. The debt management program helps debtors by reducing interest rates. Also, so that consumers can stay in accordance with their budget, the debt management program extends the amount of time it may take the person to pay back all their debt. Another great feature of credit counseling services is their ability to consolidate all the bills / accounts into one payment which is extremely convenient and far less confusing for the debtor.

Hurts - Although credit counseling and debt management have several perks they too have minor setbacks. One issue with debt management is the program length, and the amount that is paid back to the creditors. Most debt management programs last anywhere from 3-5 years which is a long time when compared to debt settlement and negotiation. Additionally, consumers who enroll into a debt management program end up paying back almost all of what is owed to their creditors whereas in a debt settlement program the creditors only recover a fraction of what was owed, then write the debt off during tax season.

How - Your payments are sent to an account set forth by the credit counseling agency then disbursed to your creditors monthly.

Consensus - You will have the satisfaction of knowing your creditors are being paid monthly, whereas debt settlement you won't. You will pay back more in a credit counseling service, than you would debt settlement, and the you'll most likely be in a debt management program 1-2 years longer than you would debt settlement.

Consolidation Loans

Intro - A consolidation loan is a loan just like any loan, however this loan is for paying off your debts. Consolidation loans are usually offered by larger financial institutes such as Chase, Countrywide, and Wells Fargo to name a few. Depending on what your trying to achieve, consolidation loans can be very satisfying.

Helps - Consolidation loans are the easiest form of financial simplification, basically they help consumers payoff all the different debts and focus on that one big payment.

Hurts - The debt is still there, and if you default now your collateral (which is usually your home) is at risk because unfortunately most if not all consolidation loans require collateral or squeaky clean credit scores.

How - If your credit score is near perfect, and you're willing to use your home as collateral then eligibility shouldn't be an issue. Your loan goes toward paying off your old debts, now your responsible for paying the one consolidation loan.

Consensus - Consolidation loans are perfect for organizing your finances, and they do ease the overwhelming feelings caused by numerous creditors and outstanding accounts. But as far as lowering payments, many consumers have reported small savings. Furthermore, consolidation loans require collateral and near perfect credit.

Quick Tips: Doctors provide medicine when you're sick, well debt counselors offer debt programs when you're in debt. Calling, or inquiring online is the best way to find out which program can help you.

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