Debt Consolidation May Not Be Your Best Choice To Eliminate Debt.

  
     
  By: Marty Stein  
 

There has always been a heated dispute from those that espouse debt settlement and those that support debt consolidation. It appears that debt settlement has the upper hand for now.

What precisely is a debt consolidation program?

It is the process of taking out a new loan to pay off and consolidate various existing loans.. It is the combination of many debts into one more easily controllable one. Of course you are charged interest and old creditors must be satisfied.. Your principle amount remains the same, so you still owe the same amount. If its done properly, your interest and payments may drop giving you the chance to pay off the loan quicker.

However, you don’t get to experience a debtfree life for a considerable amount of time.

This is precisely why many espouse debt settlement as a debt elimination method instead of debt consolidation.

So what then is Debt Settlement?

Debt settlement is a negotiated reduction in the amount owed to creditors and it can result in a 25 to 70 percent reduction in the amount of debt one has.. Debt settlement is your life vest if you are sinking towards bankruptcy. At this point your credit standing and credit score have already been impacted since you most likely have missed or been late on payments. The employing the services of a professional debt settlement company can be the best way to change your debt to income ratio and stabilize your account ratings.

When you have resolved your past debts with the help of debt settlement program, your potential creditors will hold you in consideration. Although it will take time to re-establish your credit and standing. This saves you from declaring bankruptcy, which really should be your last option if you are in debt.

Bankruptcy accompanies you for a very long time--almost seven to ten years after you have filed. It basically gives you very little freedom and is not seen well by creditors.. This is the reason many feel that debt settlement is a superior debt elimination solutions than debt consolidation
  
  Article Source: http://yourfinance.co.za   
     
 
About The Author

The debt elimination method you choose depends on your circumstances and preferences, but you can be DebtFree
 		  
     
 
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