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Debt consolidation good step, but different than debt settlement - Part 3
MORE QUESTIONS ABOUT DEBT CONSOLIDATION VERSUS DEBT SETTLEMENT (Continued from Part 2)
11) What will debt settlement accomplish for me?
Unlike debt consolidation which simply puts all your debts under one new loan and lender, debt settlement can substantially reduce the money owed to various creditors. Results obviously vary from situation to situation, but clients typically see25%-50% reductions in the outstanding balances.
12) Why not just declare bankruptcy?
Debt consolidation and debt settlement should both be choices considered by taking that last step of bankruptcy, which destroys your credit rating completely for seven to 10 years, depending on the state or province. Gaining financial freedom without killing your credit is always the best choice.
13) How does secured debt differ from unsecured debt?
Secured debt is a loan guaranteed by property usually real estate or vehicles. If you fall behind in your payments, you risk losing the possession to the lender, who can in turn sell to recoup their loan losses. Legal advice should always be sought when foreclosure proceedings begin to protect your interests. Unsecured debt, on the other hand, is simply guaranteed by your good word that you will repay it in full with interest. Debt consolidation, home improvement loans, medical bills and credit cards generally fall into this category. Lenders are forced to pursue you through collection agencies and the courts to get their money back. These proceedings in turn show you unwilling to keep your promise, therefore you become unworthy of credit. Debt settlement can show your good intentions to at least pay back as much as you are able.
14) Do interest charges keep adding to my debts?
While the interest clock continues to run on your outstanding debts, it is these charges that debt settlement can remove along with a significant portion of your principal.
15) Who contacts my creditors?
Once youve entered the debt settlement program, each creditor is advised by mail of this contract and directed to forward all correspondence to the debt settlement company offices instead of your home or business. The only further communication you should expect from your creditors is ultimately an offer of settlement substantially reducing your debt and laying out a repayment plan for the remaining portion.
Previous QUESTIONS? SEE PART 1 and Part 2
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