subject: Credit Card Debt Relief Options - Debt Settlement Vs Consolidation [print this page] Credit Card Debt Relief Options - Debt Settlement Vs Consolidation
What is the purpose of credit card debt relief options? Why are they gaining so much popularity these days? To get the answer to this question, you need to analyze the current financial situation. Due to the recent economic debacle, a lot of people have closed their businesses. Apart from that, the unemployment rate is touching the skies. It is impossible for one to cover all his expenses without a job and one of the main expenses is an unpaid unsecured liability bill. Credit card debt relief options fulfill this purpose. They are used to tackle liability problems.
Debt Settlement and Deb Consolidation; the two main credit card debt relief options
You can reduce your payable amount through settlement. On the other hand, you can merge your liabilities into one chunk and make them more manageable through liability consolidation. The two alternatives are used on an equal scale. Hence, they are often compared. The following points provide an explanation about the pros and cons of both solutions.
1. Debt settlement depends on the negotiation between the settlement consultant and the loan giving firm. The consultant negotiates about the payable amount on behalf of his customer. For instance, if the money granting firms requires the loan taker to pay eighty percent of his dues, the consultant will try to bring this percentage down to fifty or even less.
The better your consultant is, the less you have to pay to the credit card company. Debt consolidation is a very different option. It combines your liabilities so that you pay less. When you are dealing with one liability instead of five, making payments becomes easier and more economical. Apart from that, you don't have to mange the paperwork for five payments. The bank sends only one billing statement every month and it contains the consolidated amount.
2. You cannot expect large eliminations in case of debt consolidation. Hence, if you are under a debt of thirty thousand dollars or more you should not consider this option in the first place. You should go for liability settlement in which you can reduce large sections of your dues.
Apart from liability consolidation and liability relief, self arbitration and bankruptcy are the other two credit card debt relief options. Self arbitration is more productive for loan giving companies and it permits them to dictate terms. The advantage is that your credit rank remains unchanged. However, bankruptcy is one of the problematic credit card debt relief options. You should consider it if you have no other alternative.
Getting out of debt through a debt settlement process is currently very popular but you need to know where to locate the best performing programs in order to get the best deals. To compare debt settlement companies it would be wise to visit a free debt relief network which will locate the best performing companies in your area for free.
