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Debt Consolidation - is when you enroll in a program called "The Debt Management Program". Credit Counseling Organizations have these programs available to consumers that are anywhere from 30-60 days late on their monthly debts, or collection accounts. Not including a mortgage, car loan, nor student loan. The program will allow you to enroll all other debts and reduce your payment anywhere from 50-75% less then what you are paying now. This program will give you benefits like: reducing your current interest as low as 0% (depending on the guidlines for the creditor). The Credit Counselor will explain the details to you once you enroll or at least consider this program. Debt Settlement - is for accounts that are in collections. My recommendation is Google "How to Settle Debts". Read all that you can, there is no need for you to give your money to a company in order to settle your debts when you can do this yourself. You can settle on a debt for as little as .10 cents on the dollar or 30% of your balance. Make sure you get the settlement agreement in writing before you make that payment. Once you make that payment ask for another letter stating that the account was "Settled in Full", even though is was settled for less. Also request for the creditor or collection agency to update your credit report with all three bureaus stating this fact. You will also want to sent a letter of explanation to the bureaus just in case the creditor or collection agency does not do this for you. This will help you get out of debt, and start fresh with your credit report. Debt consolidation : It is the process of combining many debts into a single payment, usually resulting in lower monthly payments. Often debt consolidation involves many unsecured loans (such as credit card bills) into a single payment but with collateral backing it up. This is then referred to a secured loan. Debt Settlement : Debt settlement can severely damage your credit. Many creditors will immediately forward your account to their legal department for collections and clients may find themselves faced with judgments, liens, and even garnishments. Like bankruptcy, debt settlement may have a lasting impact on your credit report which will affect your ability to get credit at favorable interest rates.

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Q: What is the difference between debt consolidation and debt settlement?
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Related questions

What is the difference between debt settlement vs bankruptcy?

There is a subtle difference between debt settlement and bankruptcy. Debt settlement allows a person to pay off some of their debt with their creditors. Bankruptcy claims do not result in payment of the debt. Either practice creates bad credit scores for the consumer.


Does using a debt management company ruin your credit?

Yes, it does... Debt Consolidation hurts less than Debt Settlement.


What is the difference between debt negotiation and consolidation?

Debt Consolidation takes your debt and combines into one single loan, usually tied up in your house equity. Debt Negotiation on the other hand attempts to reduce the amount of debt you have by cutting the total amount you owe.


Difference between debt settlement and negotiation?

No difference, 2 different words for the same thing.


How do I find a financial consultant to assist me with debt consolidation?

A debt consolidation company gives the customers counseling and solutions in debt settlement, credit counseling, and budget management. You can opt for non-profit agencies or paid ones.


What is the difference between true debt reduction and debt consolidation?

With obligation combination, numerous credits are totally folded into another union advance that has one month to month loan fee. With obligation settlement, possibly you or an acknowledge instructor haggles for your lenders so you can pay a lower sum than what you owe, frequently in a singular amount settlement debt redemption.


Where can one find information on debt settlement vs debt consolidation?

There are a variety of financial aid websites that can assist people in understand their financial situations. Websites such as BBB, Debt Consolidation Care, Money MSN, and Yahoo Finances.


How is personal debt settlement different from debt consolidation?

When you consolidate your debt, you simply combine all of your debts into one loan to lower the payment or interest rate. Personal debt settlement is making an agreement with your creditors to pay them a lower amount.


If I am in debt what do I do?

If your debt is less than $10,000 you may go for consolidation. In case it's more than the said amount you may try out settlement. Settlement takes a hit on your score initially but gets you out of debt much faster. If you go for settlement, you may negotiate with your creditors for a lower amount, or you may enroll with any professional settlement service. In comparison, consolidation clubs your loans into one single monthly payment, waives the associated charges or interest. Consolidation may take a longer period of time to get you debt free depending on your loan amount.


How do debt consolidators eliminate debt?

Debt consolidation companies do not eliminate debt. Do not confuse this with debt settlement. Consolidation companies simply merge all of your debts together into one payment a month that you make to them and sometimes lower interest rates. Debt settlement companies, however, negotiate directly with your creditors/collection agencies to settle debts for a lower, agreed upon, lump sum. This in turn gets you out of debt quicker.


Can you still get debt consolidation after your cards are turned over to a law firm?

If your debt is in collections, you're no longer able to consolidate. Instead, you may need to look into debt settlement, through which a company negotiates with creditors on your behalf. Settlement may result in paying a lump sum for part of your remaining balance. The good: you might not have to pay off the entire amount. The bad: your credit score will suffer.


What services do Debt Relief of America provide?

They offer debit consolidation loans, debt settlement, debt management, and debt negotiation services to help people manage their debt payments so they can one day get out of debt.