When it comes to consolidating debt, the internet offers three very good options. When you want to choose between a consolidation loan, debt management, or debt settlement, it is important to have an understanding of each one so you can choose the option that is best for your needs. Many people confuse these three services, but each one brings unique aspects to the job of helping consumers pay off their debts.
Debt Consolidation Loan
A consolidation loan takes all of your high interest credit card debts and turns them into one low interest loan. Often you have to be a home owner to qualify for this type of loan. The idea behind a consolidation loan is that with a lower interest rate, you will actually be able to afford to pay on the principle and that will help you to eventually get yourself out of debt.
Debt Management
Debt management companies work with consumers to help them learn to get control of their finances. The companies teach individuals how to make a budget and stick to it and often help them make a schedule to follow for paying off their debts. Most debt management companies are non profit and exist solely to help consumers get on track. These companies don't offer loans or negotiations and seldom work with creditors. Instead they work with you so you will have the tools to secure your financial future.
Debt Settlement
Debt settlement companies actually go to your creditors on your behalf. The work hard to negotiate with credit card companies to reduce what you actually owe. They can often lower interest rates, have penalties and late payment fees removed, and even get credit card companies to lower the balance of what you owe. Many of them will set up a system where you pay them one amount each month and then they in turn make payments to your credit card companies.
Got a Question? Ask.
Ask the community a question about this article:
Frequently Asked Questions
Foreclosure no problem on home loan in 2006, big problem to refinance today - Why?
By: AtWitzEnd | 10-09-2008
In March 2009 I will have a bankruptcy removed from my credit report. In 2004 my home was foreclosed. I have worked on my credit and my score is in upwards of 700. In December 2006 I purchased a home and the bankruptcy or the foreclosure did not have any effect. I got a great deal on my home and use the bi-weekly auto draft for mortgage payments. My wife has become disabled and we have had to use credit cards due to the loss of her income and the increase in gas, food, medical expenses, etc. Do I have a chance at getting either a home refinance, equity or debt consolidation to pay off the credit cards? We are not behind on the bills, but we have had to use our savings as well and there isn't any money for any closing costs. Any good advice?
Chapter 7 Bankruptcy or Debt Settlement - Credit implications
By: Momof2 | 08-09-2008
Hi Yedda,
I'm trying to decide if it makes more sense to file a chapter 7 bankruptcy (already been to several lawyers, I qualify), or to try to settle my debt. I have about $60k in credit card debt...it was $30k but, starting about three years ago, due to job/health/children issues I stopped paying and my amount due has ballooned. There's some chance I could borrow money from my mother in law to pay the debt assuming I could settle at 30-50%. What's better for my long term credit prospects?
I can't handle much more
By: kia | 08-09-2008
I lost my job in CA and paid cash for a home in Texas with my savings, rented out my house in CA to make the payments and moved in March of this year. I intended to find a job (have 30 yrs experience) in Texas and continue to rent out the house in CA until the market came back up and I could sell. I built the house and have lived there 27 years so not a minor decision. THEN my mother died in CA in April and being the successive trustor I had to come back to Ca to handle her affairs and try to rehab her 60 yr. old, woefully neglected house and get it sold before the reverse mortgage forecloses. THEN my tenant called and said he lost his job and can't pay the rent anymore. THEN 2 weeks after the tenant moved out the squatters moved in. I got them out but they have destroyed the carpeting, removed walls, used the toilets without water and without being able to flush, torn down fencing and appear to have been packaging marijuana in large quantities in the laundry room which they turned into a bedroom complete with mattresses on the floor. They stole or removed ALL of the plants in the flowerbeds and even though this is large property with garden areas, they planted corn, tomatoes and squash in the frontyard flower beds. The house next door to mine and the house next to it have both been foreclosed and sold for less than 1/2 what was owed. The neighborhood has become terribly blighted and property managers tell me they are overstocked with houses and no renters and are not taking on any new clients. I can't sell the house for even close to what it is worth. I can't rent it out for fear of drug dealers or otherwise criminal activities being done on the property. Rents in the area are now are so low that it wouldn't even begin to make the payment. I can't reduce the payment because it is interest only as it is. I am current on the payments right now but that can't last much longer and I can't afford to hire private security to insure that the squatters don't come back once I go back to Texas. Can the lender on the CA house attach my home in Texas if they foreclose? Can they attach wages, bank accounts ect. when I do find a job in Texas? If the lender can't sell the house for what is owed (very likely to happen) do I have to pay income taxes on the difference between sales price and amount owed?
I can't get a mortgage. who can help me? we lost ...
By: leesequipment | 07-09-2008
i can't get a mortgage. who can help me? we lost our home that was only in husbands name and credit. now i don't make enough to cover a mortgage on my own and his credit is too bad to go it together.
Broke and getting sued by credit card co.
By: dinno | 05-09-2008
I am broke and being took to court for credit card debt. What should I expect to happen in court?
How long can stores keep credit card #
By: ed | 04-09-2008
How long can stores keep credit card #
Q&A Powered by:
Latest Advice Articles
Get Your Golden Parachute
By: Carol Forsloff | 12/10/2008
Golden parachutes aren't just for rich people. Everyone can have one; it just takes a little planning and optimism. You need to know where they are in your life. After that you will have the soft landing you wanted to take care of you the rest of your life.
Self Defense and Self Protection 411
By: Mark Logan | 12/10/2008
What’s your self-defense IQ? Learn about ways to keep safe in your home, at work, and going through your daily routine with this easy-to-read guide.
Anandacharya's Predictions
By: Yuga Rishi Shriram Sharma Acharya | 11/10/2008
“Twenty four years before the 3rd World War and 24 years after it ends, will be full of turbulence for India. The preceding 24 years will see circumstances akin to those seen after Mahabharat war. The latter 24 years will be like dawn before the sunrise of a New Era. I will give up my body a few days after I see my motherland (India) attaining independence. Other people will see the extraordinary changes taking place in India after it gains political freedom. “
Shocking Tips To Get Your Ex Back That Work Like A Charm
By: Paula Snyder | 10/10/2008
A break up with a long time partner is a difficult time for anyone. However, there is still hope in getting your ex back if you know how. Shocking tips will reveal how and you will be amazed at the results.
Learn How Subliminal Message Software Can Re-Program Your Psyche
By: Kristi Ambrose | 10/10/2008
Most of the time we have grown to become so negative and critical of ourselves that even if we promise ourselves that we will try to do these affirmations, we fail. It's our mind saying things like "you can't do this, you can't do anything else, why would you be able to do something this easy?" or the ever annoying "this isn't going to help you, nothing will, you will always be a loser."
Should You Battle For Love?
By: Kristi Ambrose | 10/10/2008
First off, if you are engaged for several years that already should put a flag up, someone is afraid of commitment. Another flag should go up if you argue so much that you spend more time giving the silent treatment than actually conversing with your lover.
Behind the Language of Numbers
By: raphnix | 10/10/2008
Often associated with occult and astrology, numerology is any of the many systems, tradition, or beliefs in a mystical relationship between numbers and physical objects or living things.1 it is the study of numbers and letters significance.
Step-by-Step Love Guide Available!
By: Kristi Ambrose | 10/10/2008
If a bond such as marriage can be broken I would hate to even know the percentage rate for people just breaking up and being boyfriend/girlfriend! Break ups happen for all sorts of reasons but the most general reason is simple because the couple doesn't understand each other and this in turn causes a lot of unneeded fighting! So, what if you could fix this?
More from Carrie Reeder
Bad Credit Auto Loan Refinance - Reasons To Refinance Using The Web
By: Carrie Reeder | 28/07/2006 | Advice
If applying for an auto loan refinance, there are numerous lending options. Auto loan refinancing is beneficial for many reasons. Yet, several people have never considered this option.
5 Ways To Get The Lowest Mortgage Interest Rate You Can Online
By: Carrie Reeder | 28/07/2006 | Mortgage
Everyone loves a bargain and getting a lower mortgage interest rate can save you a substantial amount of money over the life of your loan.
Bad Credit Home Loan Mortgage Services - What To Consider When Applying For A Mortgage
By: Carrie Reeder | 28/07/2006 | Mortgage
Most new homebuyers are unfamiliar with how mortgage loans work. Because of this, several people accept bad loans. This results in homebuyers paying more than necessary. If you have bad credit, accepting a mortgage with good terms is a must.
Low Interest Rate Auto Loan - Increase Chances Of Getting Approved For A Low Rate
By: Carrie Reeder | 28/07/2006 | Advice
Getting approved for an auto loan is easy. However, obtaining a low rate auto loan may be a bit more challenging. When financing any sort of merchandise, the interest rate received makes a huge difference.
Credit After Bankruptcy - Getting A Mortgage With Seller Financing
By: Carrie Reeder | 28/07/2006 | Mortgage
After a bankruptcy, getting approved for a mortgage loan is possible. However, those who apply for a mortgage should anticipate higher rates. To avoid this common pitfall, many choose to delay buying a home until their credit score increases.
Mortgage Companies - Different Types Of Mortgage Lenders
By: Carrie Reeder | 28/07/2006 | Mortgage
If applying for a new home loan, there are numerous mortgage lending options. New homebuyers may not know where to start. Different mortgage lenders fit different circumstances. In fact, choosing the wrong lender may result in paying more interest.
Raise Credit Score - Avoiding Common Credit Mistakes
By: Carrie Reeder | 28/07/2006 | Advice
The majority of people with a low credit score have likely misused credit. Understandably, some people develop bad credit because of situations beyond their control. These may include sickness, loss of employment, etc.
Poor Credit Debt Consolidation
By: Carrie Reeder | 27/07/2006 | Advice
Too much debt is a common problem that affects millions of consumers across the country. Eliminating debt is not an easy task. Yet, there are many strategies in place to help consumers reduce unnecessary debts and save money.
Self Improvement 
