Consolidate Your Bills With Debt Consolidation
In California, as well as in other parts of the country, many residents are reviewing and considering debt consolidation, have questions about how to consolidate their bills, and want to evaluate their debt relief options. Credit card debts or other types of unsecured debts such as medical bills or department store charges are particularly important subjects to review.
If you are also struggling with credit card debts, you can breathe easier as there are several methods available to get relief - including debt consolidation, debt settlement, or even bankruptcy.
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With debt consolidation, the goal is to combine your high-interest credit card debts into a single, more structured, and more manageable payment plan made to a credit counseling agency. On the other hand, debt settlement is a form of debt relief where consumers hope to settle with creditors for significantly less than what they actually owe. These days, both methods have become popular alternatives to bankruptcy, which can have a more damaging and longer-lasting impact on your personal credit.
Reviews of Debt Consolidation Companies
When you are ready to take the next step in reducing your debts, take the time to do your due diligence - regardless of which debt relief option you choose. When you read reviews of potential companies that offer either debt consolidation or settlement services, you will typically find that the reputable ones have their clients' interests at heart. It is also wise to review a company's Better Business Bureau (BBB) rating, which can generally give you an indication of its business practices.
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Debt Consolidation Companies
As previously noted, debt consolidation through credit counseling typically involves combining, or "consolidating," multiple credit card debts into one, more manageable monthly payment made to a credit counseling agency. If you are considering the debt relief option of enrolling in a debt consolidation program, here's what you can typically expect: A credit counselor will review your finances, debt amounts, and overall ability to handle those debts.
After your credit counselor has a firm grasp of your debt situation, he or she will typically develop a strategy to help reduce your debt amounts. Your credit counselor will speak to creditors, on your behalf, and submit proposals typically asking for lower interest rates, or waiving or eliminating any late fees - generally, asking them for more affordable repayment terms.
Creditors that accept the proposals are normally placed into the debt management plan, or DMP. With a single, more affordable, and more structured payment plan in place, you can, hopefully, direct more of your payments towards paying off the principal of your debts versus just the interest. In many cases, debt consolidation can help you reduce your debts sooner than if you only continued to make your monthly minimum payments at higher interest rates.
If you are overburdened with credit card debts and still reviewing debt consolidation, one option to consider is "debt settlement." As previously mentioned, with debt settlement, you are hoping to settle with your creditors for substantially less than what you owe.
Debt settlement is fundamentally different from debt consolidation in the amount of money paid back - here's how: With credit counseling, you are typically paying back the entire amount of your debts, just at a lower interest rate and under a more structured payment plan. On the other hand, with debt settlement, you are typically not paying back all that you owe; instead, you are hoping to "settle" or negotiate with your individual creditors for significantly less than your actual debt amount.
Regardless of the debt relief method, it is wise to understand the potential risks involved. With debt settlement, consumers are typically counseled to stop paying their credit card bills to save up money, over a certain period of time that they can use to make a reasonable settlement offer to creditors. In many cases, credit card companies might threaten to sue consumers for defaulting on the terms of their credit card agreements and as a result, many of these consumers will typically see a decline in their credit ratings. Even after reviewing these risks, for many consumers, debt settlement remains a popular alternative bankruptcy - which as mentioned previously can have a more damaging and longer lasting impact on personal credit .
The bottom line is, there are several debt relief options available to California residents who are overwhelmed by paying off credit card debts. Whether you choose debt consolidation through credit counseling, or debt settlement, it is smart to do your due diligence, thoroughly research potential companies, and understand the pros and cons of your debt relief options. When taken, these steps can help you get on a path towards becoming debt-free.
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