Debt Consolidation

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Debt Consolidation * Debt Negotiation

Consumers Info USA knows that mounting debt is a major concern for many Americans today.

If you are concerned about your current debt situation, constantly trying to eliminate debt from your life, you are not alone. In fact, over half of all American households have trouble meeting their minimum monthly obligations, driving them further and further into debt.

With the average household having 14 credit cards, its no wonder that credit card debt elimination is a big concern for most families. Finding a way to eliminate debt however seems almost impossible at times. But, if you are in this situation, then understand that you do have options when it comes to debt consolidation and elimination.

Once you take the time to understand these options it is easier to choose the one that best suits you.

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Debt Consolidation versus Debt Negotiation

No doubt you hear a lot of names and terms thrown around when it come to the subject of debt consolidation. Often they are used interchangeably, but they all essentially fall into two basic categories. Debt Consolidation… this is basically is getting one loan at a lower interest rate to pay off all the other loans. And Debt Negotiation… often called Debt Settlement in which an attempt is made with the creditors for a lump sum payoff, or renegotiation of the terms and reduction of the interest rate.

Debt Consolidation

Debt Consolidation Companies offer consolidation loans that people use to combine all existing consumer debts or credit card debts into one single loan and one monthly payment. Some form of collateral, usually the family home, is often required to secure these loans. A co-signer may also be required

The are also options to obtain an unsecured loans for bill consolidation, but often the high interest rate associated with them could be even greater than what you have now which would defeat the purpose.

A debt consolidation loan allows borrowers to make payments to a single creditor rather than to many creditors who compete for loan repayment. You get one loan, and pay off the other entire loan. The concept is that the one large monthly payment will be much less than the total of all those other separate payments. And it simplifies things.

Debt simplification is appealing to many people whose personal finances have become complicated and unmanageable, but true debt reduction is usually NOT a benefit of such a consolidation loan.

A disadvantage is that consolidation loans, transform unsecured debt, which is not backed by any collateral, into secured debt, which is. Since most people use the family home as collateral, it could place the home at risk if they become unable to meet the conditions of the consolidation loan agreement.

Debt consolidation lenders are willing to work with their clients. However… if for any reason, you fall behind on monthly payments or become unable to make payments at all, the lender could take whatever was used as the collateral asset.

Debt Negotiation

Debt negotiation is sometimes referred to as debt settlement. This is most often offered to people who can't handle a debt consolidation loan program. This consolidated debt plan is much different. If you qualify for such a plan, you may restructure your debt with existing creditors without transforming unsecured debt into secured debt.

In fact, secured debt such as a home mortgage or automobile loan is generally NOT included this type of plan. Unsecured debts, usually credit cards, student loans, bank lines of credit, medical bills, department store credit cards and collection agency accounts, are more typically the kinds of obligations considered for a consolidated debt plan.

Under a consolidation plan, loans are NOT made at all… which is why you usually you can’t include any debt that has collateral attached to it. (car loans, home loans, etc.)

All existing creditors remain the same. However, interest payments due creditors may be re-negotiated, lowered or completely eliminated to allow more principal to be paid to your debt each month.

In fact, debtors may cut their monthly interest costs by as much as half what it had been before the implementation of the consolidation plan. This is the primary reason why someone pursuing quick debt reduction may be able to get out of debt in only 3 to 5 years on average – much preferable to the 10 or 15 years a consolidation loan may have taken to pay off.

A debt consolidation plan will allow you to manage your finances without any additional loans and without declaring bankruptcy. If you are having trouble meeting the minimum monthly payments on your debts or you feel you are slipping further behind each month, let a Debt Consolidation and Debt Management professional go to work for you.

Now you have a basic understanding of a debt consolidation loan program versus debt negotiation, or settlement, program. You will continue to hear then general term debt consolidation used both ways all the time by many people. It is important that you know the difference. Usually it takes one simple question: Is there a loan involved with your program?

Consumers Info USA wants to remind you... that you are never obligated to accept and agree to
participate in any debt consolidation program simply because you completed an application.

Before you accept and agree to enroll in a program make sure you understand the terms. Will there be a loan involved, what are the rates, and exactly what your total monthly payments are. Then you decide if you can comfortably afford to make the payment!

Or is it a debt negotiation and restructuring program, and how much will those total payments be? How would the monthly payments be reflected on the credit report?

Academy Credit Counselors offers both options and you will know everything up front!

Academy Credit is a law firm specializing in help people just like you repair their credit and/or consolidate debt and/or negotiate debt settlements! You decide what is best for your personal circumstances.

Whether you have fair credit, bad credit, no credit, or are rebuilding your credit after a bankruptcy... Academy Credit has been rated the best in this debt consolidation and negotiation category by customer feedback.

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