An Alternative To Debt Consolidation


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Many people who first look into debt consolidation as a way out of their financial hole, aren’t aware of another option they have, which is debt negotiation. Sometimes one of these two options would suit you better, so today I’m going to give you a brief overview of these two options, and what each can do for you.

Firstly, let’s talk about debt consolidation. If you’ve already been doing some research, then you already know that debt consolidation is when you sign up to a debt consolidation company, who will arrange lower interest rates with your creditors, and combine it all into one monthly manageable payment.

This will save you money that you would have been paying to high interest credit cards, so your payments are smaller overall. You’ll also have less hassle with creditors calling you wanting your money, so this takes some stress away from your life.

There are a few drawbacks to debt consolidation, however. Such as having to cancel the credit cards that you use in the plan (which probably isn’t a bad thing, if your card put you in debt in the first place).

But in the end, the debt consolidation program will help you manage your finances, and eventually pay off all your debt.

But another option that some people forget to consider is debt negotiation, or debt settlement as it’s sometimes called.

With a debt negotiation program, you don’t have to keep making any payment to your creditors. Instead of this, your debt negotiation company takes monthly payments from you which they keep in an account. Some companies even let you keep it in your account, although this money isn’t for spending.

In the meantime, your debt negotiation company will be working with your creditors to agree upon a settlement fee. Sometimes you can even get up to 50% taken away to your amount of debt. And then once your creditors and debt negotiation company (and you) have agreed upon a settlement fee, the money is taken from the account and paid to the creditor in a one off payment. Your debt is then cleared with that company.

While this sounds like a better option, there are also drawbacks to this. (No option is perfect for everyone).

One of these drawbacks is the fact that being associated with a debt negotiation company will lower your credit score. But if you’re lucky, your debt negotiation company will make sure your creditors leave your credit report as “paid in full", so it doesn’t adversely affect your credit rating.

So there you have it. Another option other than debt consolidation. It may not be for everyone, but it’s just another option you can take to help get you out of your financial hole, and eventually make you debt free. Which is ultimately what you want, right?

Marc Barclay is owner of the Debt Consolidation Blog, where he likes to give free help to people in financial crisis. To learn more about debt consolidation and student loan debt consolidation , be sure to check out his blog.


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