Credit Counseling Is Service For Debtors

Credit cards can carry a much larger interest rate than even an unsecured loan from a bank

. Debtors with property such as a home or car may get a lower rate through a secured loan using their property as collateral.

Creditors would have an incentive to undertake all profitable investment opportunities. However, this solution is not satisfactory either, since most investment opportunities depend on business continuity and disappear or lose substantial value when default occurs and the equity holders lose control of the firm.

Creditors will typically extend the following benefits when you enroll in a Debt Management Plan: lower interest rates, reduction or elimination of fees and, a consolidation of your payments into just one each month. Because of the payment consolidation, many consumers perceive debt management and debt consolidation to be the same thing when they are in reality, quite different.

Credit is often the lifeblood of a business, but if the debt term is too steep, even an otherwise successful business can fall too far into the red. Creditors want it in lump sum, most times. They thrive on this fact and hope their customers will continue to make minimum payments, thus forcing prolonged payments. The heap of interest will leave the consumer paying four times the initial amount!

Credit counseling is service for debtors, but is performed by counselors who work for creditors. Debtors also must educate themselves about the objectives and methods by which different debt arbitration plans pursue debt resolution. Creditors hire collection companies to collect debts for them, because they simply don't have the time or resources to chase down all of their severely overdue accounts.

Collection agencies have cheap labor and a streamlined system to pursue such accounts. Credit card debt settlement can be most effective when you appoint negotiators to take up your case. Debt relief networks will help you to find most reliable settlement agencies in your area for free.

by: Karri Owens.

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