Debt Consolidation vs Debt Negotiation
Many people debate the subjects of debt consolidation versus debt negotiation because both of these options offer the opportunity for financial freedom. Determining which choice is best will depend on the individuals situation. Each of these solutions has benefits and drawbacks. Both must start with a careful examination of the personal financial situation. The consumer must decide what type of service, what they can afford to pay and what the ultimate outcome will be for the credit report. Consolidation and negotiation will be presented differently depending on whom the individual talks to and what their preferences are.
Consolidation companies will take the view that debt consolidation versus debt negotiation is not really two different things. Most companies can and will offer both services. Not only will they consolidate bills into one payment but they will negotiate with creditors for lower interest rates and cancellation of fees. They will assist with consolidation and repayment of the debt but this is not truly negotiation. It is important for the individual to understand exactly what service is available and how it will be utilized to increase credit and reduce debt.
When viewed from the negotiation side, this argument can be seen as something totally different. Negotiation involves bargaining with creditors for a smaller payoff amount. Most creditors are willing to settle for a reduced amount if the amount is paid in full. Negotiation services will work with the consumer to find the middle ground. This can be a long process, taking as long as 6 months to a year. Once a consumer determines what they can reasonably pay, the company will make a proposal for the individual to creditors. The consumer must have the money in the bank waiting when a settlement is reached as payment is needed immediately.
Because these two options are quite different, they will have different effects on a credit report. Negotiation may not repair credit but it will show that the consumer has paid the obligations in full which can go a long way with future creditors. Consolidation is usually reflected on a credit report as being in counseling. Some creditors view this as a positive step, especially since timely payments are reestablished. They may remove all negative information once the consumer has completed a consolidation program, but this varies by creditor. Reviewing the effects on the credit report is just one of many ways that the debt consolidation versus debt negotiation debate can be viewed.
This subject can be debated from a Biblical viewpoint. Some people may feel it is best to pay off everything that is owed, which is only accomplished with consolidation. Others feel that things like interest and fees are not necessarily valid obligations that must be paid back. No matter which side of the debate a person falls on, it is up to the individual to come to a final conclusion about spending habits. Isaiah 55:2 warns people about spending "Wherefore do ye spend money for that which is not bread? and your labour for that which satisfieth not? hearken diligently unto me, and eat ye that which is good, and let your soul delight itself in fatness." When debating whether to choose debt consolidation versus debt negotiation, a Christian consumer must take the words and teachings of the Bible to heart and make their own conclusions.
Debt settlement versus debt consolidation is a dilemma that individuals often face when evaluating options for seeking financial freedom. These two alternatives to bankruptcy can help an individual find peace after dealing with the suffocating grip that large financial obligations have placed upon life. It is important for a consumer to evaluate the current financial situation in order to determine if settlement or consolidation will help to achieve the freedom from financial stress that is being sought.
Saving money on current bills will be a common reason to choose one financial program over the other. This can often be accomplished with lower interest rates. When looking at debt settlement versus debt consolidation, it is important to note that consolidating takes all current obligations and rolls them into one large loan at a lesser interest rate than most creditors charge. After obtaining the debt consolidation financing, the consumer will use that money to pay off creditors and then pay one monthly fee to the bank that provided the consolidation loan. The result is hundreds if not thousands of dollars in interest savings, but no actual reduction in the principal amount. Sometimes, reducing the principal is more important than receiving a lower interest rate. While consolidating does save in interest charges, it does not reduce the principal that is owed. When considering both options, settling actually involves a company working with creditors to reduce the amount that is owed. Settlement companies work with creditors to get them to agree to a repayment of 50-70% of the consumers financial obligations. The end result is a smaller amount of debt.
Each financial strategy has significant advantages for the consumer to consider. When comparing debt settlement versus debt consolidation it is important to view all important features. With the option to settle, the consumer is often able to actually reduce the amount of money that is owed, but the effect on a credit rating is often negative since settlement companies advise the individual to suspend payments to creditors while they negotiate on the consumers behalf. This negotiation process can take quite some time, with a creditor reporting that no payments have been made during the entire process. Additionally, consolidation often requires that the consumer have a valuable asset, such as a home, to use to secure a loan. For those that do not own their own homes, settlement might be a better option.
Consolidation also has advantages for individuals in need of financial assistance. For one, the convenience of paying only one amount is much less stressful to manage than staying on top of numerous obligations. Also, the interest savings on a lower interest loan can be substantial and can be tax deductible. Finally, consolidation can be less harmful to a consumers credit score since the sum of the loan is used to pay off creditors and there are no delinquent payments being reported to credit bureaus as can be the case with settlement.
Deciphering these choices and determining the best option can be a difficult task. Reviewing debt settlement versus debt consolidation will require research and significant time spent on comparing the options. Many credit counseling firms offer free consultations to help the consumer evaluate their financial situation. It is important to be mindful that these agents often have incentives to steer consumers toward their services. An agents potential profit or financial gains may lead them to be dishonest with prospective clients. "Even so ye also outwardly appear righteous unto men, but within ye are full of hypocrisy and iniquity" (Matthew 23:28).
After Bankruptcy Debt SettlementsAn after bankruptcy debt settlement plan is an essential step to getting one's financial record and score in good standing and often involves professionals who can contact creditors and lenders to negotiate due balances. A bankruptcy is a traumatic event that can leave a person in an emotional state that opens them up to agreeing to settlements that will harm them for years. Therefore, it's important to learn how one can make the best get their finances in order. Whether a debtor filed for chapter 7 or chapters 11,12, or 13, settling balances and satisfying creditors is the best start to cleaning up one's record. Having a reputable firm that is expert in handling after bankruptcy debt settlements guide the debtor through this process will make life easier and the future brighter.
An effective financial guidance company will develop a financial profile for the client. This allows them to start a dialogue with the creditors to come to the best solution for an after bankruptcy debt settlement. Their primary focus should be on welfare and not on their profits. Debtors also need to consider the fees that the firm will charge for their services. They need to shop around and find a satisfactory firm with reasonable fees. Consumers also want to find a company that has experience in after bankruptcy debt settlements. It's wise to ask what their track record is and check the consumer business reporting agency that applies to that company to see what kind of complaints have been registered about the company's services.
A good financial company should handle all unsecured debts, including credit card bills, medical bills, personal loans, business loans, and others. What they will not handle are secured balances, such as car loans and mortgages. Also consumers should check to see what their minimum debt level is for each creditor. A normal amount is $500. If the balances are less than that amount, most after bankruptcy debt settlement firms will not negotiate with the creditor.
Proverbs tells us to owe no man anything. We must be responsible about dealing with the debt we have incurred. We must pay back what we can within the limits of the bankruptcy laws and our ability to pay. As we pay back our debts through our after bankruptcy debt settlements, we must prayerfully seek Gods wisdom and humility. Settling overdue bills and payments is a painful and arduous process. But God will see us through. With His help, after bankruptcy debt settlement can be a growing experience that helps us manage our debts with biblical principles. "Counsel is mine, and sound wisdom: I am understanding; I have strength" (Proverbs 8:14).
Consolidation service debt settlement companies offer varying relief services to consumers who wish to reduce their indebtedness load or eliminate all unsecured loans. Consumers are more frequently choosing the financial options of consolidation in answer to high interest rate loans and the high stress of owing more. Offering alternatives to multiple, monthly loan payments or crisis financial situations, these sources offer competent and helpful consumer financial services. Obtaining debt relief strategy through a company that specializes in this area can start a consumer on the road to financial recovery.
These settlements can be applied to a wide array of financial circumstances depending on consumer needs. One strategy is to offer consolidation loans to qualifying consumers who have valuable assets to use as collateral. Home ownership easily qualifies many consumers for a consolidation loan through consolidation service debt settlements. Other basic requirements such as sufficient earnings for monthly payments, good credit history and amount of loan desired are also brought into consideration. Looking at one's credit history beforehand can also be a prudent move as this will always affect the offered interest rate with any financing.
These companies offer loans for consumers to pay off unsecured debt thereby lowering monthly payments and length of pay off terms. The more valuable the collateral, the lower the interest rates that are available for loans through consolidation service debt settlement sources. There are minimum and maximum loan amounts available to consumers as well. A consolidation loan approved through some companies can offer significant savings to consumers and provide the much needed relief from the stress that almost always comes with financial problems. Consolidation service debt settlement companies can help a consumer get out of debt and still pay off his home by the time retirement rolls around.
Another relief option offered is negotiations for more critical financial circumstances. Consumers who have met with unexpected, financial hardship can find help through companies that can negotiate with creditors on behalf of consumers. Through professional arbitrators, consolidation service debt settlements can be secured that can reduce a consumer's overall indebtedness by as much as 60-70% in some cases. Satisfying all parties involved, consolidation service debt settlements offer some consumers an alternative to bankruptcy or collection suits. Realistically look at finances to determine which debt relief option suits the immediate need. "He that trusteth in his riches shall fall: but the righteous shall flourish as a branch." (Proverbs 11:28)