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Debt Consolidation - There Is A Difference
Many people in debt don't think there is a way out. The fact is, debt
consolidation is available to help you with your debt management. Debt consolidation, or
credit counseling, is a
way to honor your debt and save money at the same time. People treading
the heavy waters of financial distress, are often confused by the options
available and just what they mean, particularly consumer credit counseling. One of the biggest misunderstandings is
that debt consolidation is equal to bankruptcy. This is not true, at all.
The only similarity between the two is that Chapter 13 bankruptcy is a
repayment plan for debt help.
Debt consolidation is also a repayment plan, an option chosen by you, and
negotiated on your behalf by professional counselors. It enables your
creditors to completely recoup all the monies they are owed. Debt
consolidation or debt
reduction is not forced on you by anyone. It is a viable
alternative to the more drastic choice of declaring bankruptcy.
Legal liability for your debts remains with you, and therefore you retain
more control of how your credit standing will be affected.
How Debt Consolidation Works
Many people think that debt consolidation is a loan, when in fact, it is
just the opposite. Debt consolidation is not a loan. A debt consolidation
company's job is to help you reduce your monthly payments, making it
easier for you to pay off your debt. A debt consolidation company should
have trained counselors who work with you to lay out a re-payment plan. If
you need credit card
debt relief, they also negotiate better rates for you with credit card
companies, or whoever you owe money. For instance, as part of the debt
consolidation program, if you're paying 18% interest on a credit card,
you're debt consolidation counselor can usually knock that down to about
8%. That's what their job is. Most debt consolidation companies do not
charge you for debt
counseling. Find out all of the fees needed to consolidate debt, to make
sure that you do not have to pay for something you don't want to pay for.
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