Debt Solution

What is Debt Solution?

Debt solution is a way of reassessing debt, gaining information and deciding the best way for a person to eliminate their debt over time. Formerly, there were three primary ways to go about resolving debt for the consumer: bankruptcy, debt consolidation and attempted survival while continuing to pay minimums on credit cards, and other debts. Now, because of changes in the law, there are many different debt solutions, however, the most popular forms of resolving debt problems include, but are not limited to, debt settlement, debt consolidation, cash out refinancing, and bankruptcy.

There are many agencies throughout the country that specialize in aiding individual consumers in debt solution and finding the best options for them. There are also online resources that can present a number of debt solution options and put individuals in contact with someone to help them.

What is the difference between debt settlement and debt consolidation?

Debt consolidation is a process that allows you to combine all of your debts into one single amount. Usually this figure is calculated when working with a debt consolidation firm, who will then negotiate with the creditors on the behalf of the debtor and may lower your debt between thirty and sixty percent. Often during this process, late fees and some taxes are waved, however, this is not always the case. After negotiations, a repayment plan is agreed upon between the agency and the creditor, which are usually to be paid in monthly installments.

Debt settlement is a slightly different process. In debt settlement, the individual consumer or a hired consultant work to negotiate lowering unpaid debts with the individual creditors. Often during negotiations, a consumer may bring their debt down as much as 75%. If there is no third party, this form of debt solution allows the debtor and creditor to come to a formal agreement about how much debt is to be paid by the debtor. When a consultant or third party is involved, their commission and fees must be calculated as well and considered when determining how much one can afford.

It is often beneficial to work with a professional who specializes in either debt settlement or debt consolidation, as there are often details that they will know that are unknown to individuals. However, when hiring a firm or consultant, it is important to remember that their services are also worth money. Therefore, an individual must always remember to ask and discuss an agency’s fees, as well as their actual debt. These fees are usually much less than what a person is paying, over-time, when they have not managed their debt.