Different Debt Help Service For Borrowers
If you are experiencing difficulty in keeping up with your debt repayment
, it's time to take control over the situation and consider acquiring the appropriate debt help service. In this article, let's discuss each type of debt relief service to help you see which one will work best.
Credit Counseling. Sometimes, all you need is a credit counselor who can guide you in managing your finances. A credit counselor can help you set up a budget plan so you can utilize your earnings more efficiently. Apart from creating a debt repayment plan, you can be properly guided on how you can cut back from your expenses and stay out of bad debt.
Debt consolidation. For borrowers who are dealing with multiple debts, debt consolidation is an option. There are two ways to consolidate debts. One is by acquiring a debt consolidation loan and another is by enrolling in a debt consolidation program.
A debt consolidation program is where the borrower seek the assistance of a debt consolidation agency in distributing payments to different creditors. Instead of submitting your payments to your creditors on your own, you will submit your monthly payment to the agency, who in turn, will distribute payments to corresponding creditors.
Another way to consolidate is by taking out a loan from a debt consolidation lender. The amount you borrow will be used to pay off all your debts at once. This way, your debt will immediately stop from accumulating due to the additional interest rates and late penalty charges.
The loan consolidation is a secured loan so you will be required to submit collateral. When the loan has been approved, you will be subjected under your debt consolidation company's repayment terms. The repayment period can range anywhere from 5 years to 10 years or longer, depending on the amount borrowed.
Debt Settlement. A debt settlement is where a debt consolidation agency or credit counseling agency negotiates with creditors on behalf of the borrower with a common goal of reducing the original amount of debt so the borrower can make payments right away.
Under a debt settlement, the amount of debts can be reduced by up to 60% or more. However, the creditor expects the borrower to pay in a lump sum payment. When an agreement has been reached, it is the debt settlement agency or debt consolidation agency that will provide the borrower with the loan.
Afterwards, the borrower must pay back the debt consolidation agency according to its repayment terms. It is very important to find a trusted lender to make sure that you will be getting genuine debt relief.
Credit Card Debt Consolidation. If you're dealing with credit card debt, you can either take out a loan to pay off all your outstanding balances at once. Another option is to apply for a balance transfer credit card that offers zero interest rate for a certain time period.
Copyright (c) 2009 Suzy Vanstrusen
by: Suzy Vanstrusen
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