Debt Consolidation Services
In North Carolina as well as in many parts of the country, individuals and families who need relief from high-interest credit card debts and unsecured debts - such as medical bills, gas charges, or even department store charges are looking for assistance from debt consolidation services. If you are also overburdened with credit card debts, there is help available - from services offering debt consolidation (aka debt management plan or DMP), debt settlement, or even bankruptcy.
When a consumer signs up with a company that specializes in debt consolidation services - whether it's a profit, non-profit, or even Christian agency - the process typically involves combining, or "consolidating," debts into one, more structured, and more manageable payment made to a consumer credit counseling agency. By contrast, debt settlement is a process where you are hoping to settle or negotiate with creditors for substantially less than what you owe.
Both options have become popular alternatives to bankruptcy, which is also a form of debt relief, but one that can have a more damaging and longer lasting effect on personal credit.
See your debt relief options today. Request a FREE debt relief analysis and savings estimate, at no obligation to you.
Credit Counseling Services
As mentioned earlier, the goal of debt consolidation or a debt management plan (DMP), is to combine or "consolidate" your unsecured debts into a single, more structured, and more manageable monthly payment made to a credit counseling agency, which in turn, disburses those funds to individual creditors.
When you enroll in a debt consolidation plan, a credit counselor will assess your financial situation and debt amounts. Then, your credit counselor will typically create a debt relief strategy for a more affordable repayment plan, and submit proposals, on your behalf, to creditors requesting lower interest rates, elimination of late fees or other penalties. Creditors that agree to the proposals are placed into the debt management program or plan.
With a more structured and more affordable repayment plan in place, you can, ideally, reduce your debts sooner than if you continued to make the monthly payments on your credit cards at higher interest rates. However, it's important to understand that while credit counseling agencies typically submit proposals to creditors and disburse those funds to creditors, it is your responsibility to make sure that funds are available in the account set up for your monthly payment.
Debt Settlement - Another Debt Relief Service
For many consumers, debt settlement is also a viable debt relief option or alternative to debt consolidation services. If you are considering debt settlement, it's important to understand that unlike debt management where you are typically paying off the entire amount of your credit card debts, with debt settlement, you are hoping to settle or negotiate with creditors for significantly less than what you owe.
Today, many credit card companies are willing to negotiate with consumers who are struggling with credit card debts. In many cases, creditors that sell off what they may consider as "bad debt" to third-party collectors may only receive 10 cents on the dollar. As a result, creditors typically consider negotiating with consumers who are struggling with debts but who can make a reasonable settlement offer.
Yet, there are potential risks involved with debt settlement. As the term implies, debt settlement involves negotiation - credit card companies are certainly not legally required to settle with you. Debt settlement firms also typically advise or counsel consumers to stop making their credit card payments and set aside funds over a length of time that they can use to make a reasonable settlement offer.
In many cases, creditors may threaten to sue consumers that default on the terms of their credit card agreements. In addition, consumers that default on the terms of their credit card agreements typically see their credit scores decline.
In spite of the potential risks involved with debt settlement, it remains a popular debt relief alternative to bankruptcy - which, for many consumers, is typically the option of last resort and one that can have a more negative and longer lasting impact to one's personal credit.
Comparing Your Options is Important
The bottom line is, if you are overwhelmed with unmanageable debts, it is important to know that help is available. So, take the time to do your due diligence and research all your debt relief options - including debt consolidation (or debt management plan) and debt settlement.
Start here to request a FREE debt relief analysis and savings estimate - at no obligation to you.