Consolidate Debt Into One Low Monthly Payment – Debt Relief Tips

Consolidate Debt Into One Low Monthly Payment Debt Relief Tips

Most American consumers have a number of credit cards in their wallet. Some statistics say there's a majority who have six or more, and all of them get used. Maxing out the limit on one, the consumer shifts to another and then another, until every month sees a minimum payment being made on each of them. Then, something happens and the minimum is impossible to make.

After that, the sleepless nights, bill collector calls and dun letters begin, and the consumer starts to dream of just having one debt to deal with. There are a few ways to make the notion a reality, and that's where debt resolution companies come into play. Programs like debt consolidation, debt settlement and debt management can all reduce the numerous credit card bills each month into one. Unsecured debt is packaged, and managed and eventually all bills are paid off.

There are differences in these programs that every consumer should be aware of, and before entering into one, they should understand what each means. Debt consolidation works by obtaining a secured loan, which is used to pay off all debts. Usually, the loan is secured against property in the form of a second mortgage or home equity loan and is for a long period of time. The monthly payment is low, but it can go on for years. This means a lot of interest is paid over the course of that time.

In both debt settlement and debt management, no loan is required. Debt resolution company negotiators work with lenders to reduce the amounts owed, while the consumer pays monthly into an insured account. The funds in these accounts are used to pay off a newly negotiated settlement balance. Many consumers see as much as 50% reduced from what they owe, and can be free of debt in 12 to 36 months. While a credit rating is effected during the process, chances are that the consumer's credit rating has already taken a hit with missed payments. The good part about these programs is that with the rapid payoff time, they can start to rebuild credit as soon as the debts are paid. And, with the reality of one debt rather than many, it also allows them to start living a life again.

One debt doesn't have to be a dream. It can be a reality with proper debt relief and working with the right company.

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