If you are knee-deep in debt and falling several months behind on your payments, you might be considering debt consolidation. If so, you're not alone. These days, many residents of New York and all across America need relief from skyrocketing credit card debts as well as unsecured debts like utilities, department store charges, or medical bills. The good news is, many consumers in debt, just like you, have several options available to help them shed and reduce their debts -- including debt consolidation, debt settlement, or even bankruptcy.
Also known as a "debt management plan" or DMP, debt consolidation allows consumers with debts spread across multiple cards to combine them into a single, more structured, and more manageable payment plan made to a credit counseling agency. On the other hand, debt settlement affords one the opportunity to negotiate, or settle, with their individual creditors for a substantially reduced amount of their original debts. Both debt relief methods have become popular alternatives to bankruptcy -- which has a more damaging and longer lasting impact to personal credit.
To find out how debt relief can help you reduce or pay down your debts, answer a few, simple questions and get a free debt relief analysis and savings estimate. Start now!
Benefits of Consolidating Debts
The term "debt consolidation" represents a wide variety of debt relief options in the industry. But what it actually refers to is the process of combining, or "consolidating," credit card and unsecured debts into one, more affordable, and more manageable monthly payment made to a credit counseling agency that, in turn, distributes funds to creditors. When you enroll in a debt consolidation program, credit counselors review your outstanding debts, and review how much money you can reasonably dedicate each month to paying down your debts.
If credit counselors determine that debt consolidation may be the right plan or program for you, they typically develop a debt-reduction strategy and submit proposals (on your behalf) to creditors asking for reduced interest rates, or the waiving or elimination of any late fees or penalties. Creditors that agree to the proposals are placed into the debt management plan.
The goal with debt consolidation is to provide you with a single, more predictable, and more affordable payment plan -- one that can direct more of your payment towards paying off the principal of your loans rather than just the interest. If followed faithfully, a debt consolidation program can help reduce your debts sooner than if you only continued making the monthly payments on your credit card debts at higher interest rates.
Debt Settlement Alternative
If you have the type of debt that qualifies for debt settlement or if you simply cannot afford to pay the full amount of your credit card debts, settling can typically allow you to negotiate with creditors for a reduced amount of what you originally owe. For many consumers, debt settlement or negotiation can offers an honest and legal form of debt relief and a way to pay back their debts without declaring bankruptcy.
Keep in mind, however, the potential risks involved: When you enroll in a debt settlement program, your credit score will typically decline because when you settle your debts, it usually involves "falling behind" on your payments in order to set aside funds that can be used to make a settlement offer (or what's also called a lump sum payment). In addition, as you fall behind in making payments, you can also face legal action for, essentially, defaulting on the terms of your credit card agreements. But, in spite of all these risks, debt settlement has become a popular alternative for many consumers who want to avoid declaring personal bankruptcy.
How Much Can You Save with Consolidation?
Each individual's debt situation is unique, and sometimes, finding a reasonable way to eliminate your debt may seem like an insurmountable task -- especially if you have lost your job or are simply not earning enough. But you should not give up or lose hope of ever finding help. Regardless of the reasons why you falling months behind on your payments, debt consolidation may be able to help manage your debts and potentially lead to savings and relief.
The amount of savings that you can potentially get, every month, depends on how much you owe, the current interest rates that you are paying, and any late fees or penalties. Keep in mind that with a debt consolidation program, you will get a more structured and more lenient repayment plan that can help you pay off your debts sooner than if you only continued to make the minimum monthly payments and at a pace that you can manage.
That's why it is a smart move to find out how debt consolidation can help you reduce your debts and get you back on track to financial freedom. Request a free debt relief analysis and savings estimate now to get you started -- it's free and it only takes minutes!