Credit & Debt Management Control

Credit Card Debt Relief Solutions For 2011 – Debt Settlement Vs Consolidation Programs

There are two major credit card debt relief solutions for 2011. These methods are namely debt settlement and Credit Consolidation. These two methods have replaced the method of bankruptcy filing because they do not have the negative impacts which are inevitable in the method of bankruptcy. However, the question is, when to use settlement and when to use consolidation? Let us find out the differences between the two and the situations when they need to be used.

Debt settlement Vs. Consolidation programs:

1. Settlement is about eliminating a certain percentage of the outstanding that the consumers have by the dint of negotiation with the creditors. Consolidation on the other hand is not about eliminating the Debts but is about reducing the interest rates on the loans along with waiver of some costs like insurance and over limit charges to reduce the burden of monthly installments.
2. Settlement letter is to be sent to the creditor in case of settlement programs and in case of consolidation, the creditors need to receive consolidation offer letter. Both the letters need to have a repayment module well defined.
3. In settlement, the negotiator approaches the creditor only after the later sells the debt to a collection agency and then negotiates for elimination of around 50-70% of the dues. In case of consolidation, the loans are not sold out to the collection agency and the consolidator approaches the creditors approaches the creditors at the beginning and negotiates for reduction of interest and waiver of certain costs.
4. In settlement when the creditor agrees (after receiving the bankruptcy threat), the consumer needs to repay the remaining amount in bulk. In case of consolidation when the creditors agree (after receiving the bankruptcy threat), the loans are re-amortized and the consumer then needs to pay to the consolidator every month and then the consolidator pays each creditors with that money and this continues till the loans are completely paid off.
5. Settlement takes 1-3 years to complete and the method of consolidation takes around 5 years to complete.
6. Settlement works well in case of single or a maximum of three different loans but consolidation is meant for consumers who have more than 3 loans in their bucket.

So, be careful about your requirements and then choose wisely and get out of Your Debts accordingly. The good thing about these two relief methods is that the credit scores are not affected by any of these methods.

Debt settlement is a viable option to filing bankruptcy and is becoming increasingly popular amongst Americans with over $10k in Unsecured Debt. Creditors are ready to negotiate. You can literally eliminate 50% of your unsecured debt with a settlement. Check out the following link to locate legitimate Debt Help in your state.

About the Author

www.DebtReliefEmergency.com is a matchmaker in the debt settlement industry. They have paired up thousands of consumers up With Debt Settlement companies who are most likely to get consumers the best deal.

http://www.DebtReliefEmergency.com

contact us for Free Debt Advice = 800-951-9280

Money 411: The Difference between Debt Settlement, Debt Consolidation and Debt Management

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