November 29, 2007

Debt Consolidation can be helpful

By admin

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Many people are in debt, right now. That’s no news, specially in these days of recession, after the facts of the cost of the war, which depresses the economy.

After a short while, many people can experience a financial collapse unless actions are taken accordingly, to avoid the potential of high over-indebtedness.

Some debtors are able to find a good solution in the refinancing of the original debts, and it works, specially when the whole package of debts are concentrated in few big-fish creditors. Ideally, only one creditor.

And when someone has many small debts already to be paid, then Debt Consolidation works to make a good package which combines ease of payment and relief of the soul. :grin:

As you may possibly know there are at least 3 approaches to (over) debt payment. Under the rules of the first approach, you just have to relax, take it easy and bankruptcy will take away your debts together with your credibility.

Under the second scheme, all the debts are summed-up together, which is made to cut some costs. The smart move is to consolidate debt under the wise advice of a specialized company, which in turn, gives you the additional value of managing your debts the best way possible and obtaining some discounts and lower interest rates from your creditors.

Finally, the third option is - what is usually called - a Debt Settlement or Debt Negotiation, which is no more than a process where only a (small) part of the total debt is paid to the creditor. A deal is settled with the creditor for a lump sum amount, which is collected under a trust account by the debt settlement companies.

Which one fits better for you? It must be evaluated according to the case. But, let’s say that under the rule of thumb, if someone has many small-amount debts, it’s wise to consolidate debts, under a signed contract with a specialized Law Firm/Debt Counselor.

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One Response to “Debt Consolidation can be helpful”

  1. debtsettlement Says:
    January 16th, 2008 at 7:05 pm

    The above comment by Chris points out exactly what I?ve been saying
    about debt company fees. They are at the WRONG end of the program. In
    the old days, we used to charge a very small retainer up front, but
    the main fee was based on a percentage of the savings achieved during
    the negotiation. So the fees were based on success, and did not interfere
    with the client?s ability to accumulate funds for some early settlements.
    Nowadays, it?s a rare company that operates this way, and the result is
    that very few settlements take place during the first 12 months clients
    are enrolled in a third-party debt settlement program. Skip the fees! Learn
    how to do this yourself. You?ll be out of debt faster, and you?ll have
    more control over the process.
    debt settlement effect on credit report

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