Debt Consolidation: Combine Your Debt & Save
When you consolidate your debt, you take out one, lower-interest loan to pay off all of your many, high-interest loans. Rather than having to pay multiple creditors on multiple due dates, you then just pay one bill per month to one creditor. In most cases, this bill will be lower than what you were paying before because the interest rate will be significantly less. The consolidation service takes this bill and divides it up among your creditors, which can help you pay your bills on time each month. Debt consolidation is best for people with multiple creditors or high-interest loans. Debt consolidation makes the most sense for unsecured debt, which is explained below.
- Unsecured debt - This is any type of debt that is not secured against a piece of collateral, such as a house, car, boat, etc. Personal loans and credit cards are two examples of unsecured debt.
- Secured debt - Secured debt is a loan that is tied to an asset, like a home, bank account, car, etc. When you fail to make payments on secured debt, the creditor has the right to seize the asset you put up for collateral. Secured debt doesn't lend itself as well to debt consolidation because secured debt creditors are less flexible and less willing to negotiate.
With our debt consolidation services, you will be connected with a non-profit company to help manage your monthly payment and offer you debt counseling. You will get to pick which day of the month you would like to make your single monthly payment to the consolidation service. With debt consolidation, you will save thousands in interest rates, late fees, and penalty fees by paying your creditors on-time with a lower interest rate.
Debt Settlement: For More Serious Debt Problems
A good rule of thumb for deciding between the two services is, if you have over $10,000 in debt, you might consider debt settlement instead of debt consolidation. With debt settlement, you enlist the help of professional debt managers to negotiate with your creditors to get the total amount of your debt reduced. You can expect to end up paying only 40-60% of what you actually owe. Our negotiators have been doing this for years and know exactly how to handle creditors in a way that alleviates your debt problems and saves you money.
Debt settlement works because you stop paying your creditors directly and instead begin depositing money each month into an interest-bearing account. After several months, your negotiators will have reached an agreement with your creditors and all the while your money will have been accruing interest in your account. In the end, you can end up paying your creditors back for less than 10-20 cents to every dollar you owed. Though debt settlement does have a negative impact on your credit, this blemish is not nearly as indelible as bankruptcy or charge-offs would be. The damage done by debt settlement is easily repaired with credit restoration/repair services.
For more information on how to get yourself out of debt, see our "You Can Get Out of Debt" page.
