How good is debt settlement over debt consolidation? Is it a more reliable method? ?
Tuesday, January 26th, 2010 at
12:02 am
Wһаt I аm interested tο know іѕ іf Debt Settlement really facility аחԁ іf уου know οf anyone wһο һаѕ bееח through іt.
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Tagged with: Debt Consolidation • debt settlement
Filed under: Money Saving Tips
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Debt Settlements are very uncommon from Debt Consolidations.
Typically, you can do Debt Consolidation *BEFORE* you get into too much distress with your creditors. It is a way of reducing your multiple monthly payments into a single lower payment. The objective is to get your monthly budget more controllable. Debt consolidation only facility though if you do not incur any new or additional debt after you complete the consolidation.
Debt Settlements are agreements (typicall entered into at some point after the debtor has defaulted on payment) with a creditor or the collection agency representing a creditor where the creditor agrees to accept an amount lower than the stated debt. While this seems like a excellent deal for the debtor, it has and can have many drawbacks.
Often the creditor and or collection agency have tacked on a significant sum to the original debt, so much so that even the discounted amount may be more than you originally owed at default. While it is legal for the creditor and/or collection agency to add interest, fees, and penalties, some of these additions can be quite high (in some cases they may even exceed the legal maximums). Further, if the agreement is to start a payment schedule, the interest, fees and penalties may continue to accrue (often making it impossible for the debtor to ever pay off the debt). Don’t forget that the dollar amount of the "money off" must be reported as chargeable income by the debtor.
If entering into a debt settlement agreement , be sure to have everything in writing and be more than sure you know everything you are agreeing to.
While many debt collection agencies are honest and sincere in helping you resolve your debt problem, some are not and can make things much worse.
Be careful out there.