Consolidation Or Debt Settlement – Which Debt Relief Option Is Better For You?
Debt consolidation is an option that you can initiate yourself for debt relief in Phoenix. It means combining together numerous existing debts into one new debt. By doing so, you will then be able to manage your debt better by making only one payment per month to a single creditor instead of juggling multiple debts with different creditors. Debt consolidation also offers you better interest rates for your debt. By consolidating the debt, you pay lower interest rates than you would have if you had kept all your debt payments organized separately. Your monthly debt payment amount also goes down since you are only making a single payment to one creditor instead of multiple.
You have to be aware of the pros and cons of debt consolidation before you do so. There are benefits that you will get when you do this, too. One benefit is that it gives you peace of mind because all your bills will be under one roof that you have to worry about paying. In this way, you won’t have to bother yourself anymore about the separate bill payments anymore. Some may think that paying multiple bills may be a pain in the neck, but this is exactly what debt consolidation does. Once you have consolidated your debts, you won’t have to bother yourself anymore as you only have to worry about one payment.
Another benefit that you get when you consolidate your debts is that it helps you manage the money that you have. With each bill payment, you only have to make one payment and not worry that you have to remember all the creditors that you owe money to. Since the consolidated debts already have a due date, creditors won’t forget about you when they prepare your next billing because they know that you will be making payments on time. This also helps you in building a credit history as you only have to make one payment per month instead of paying multiple bills every month.
Aside from debt consolidation, there’s another option you have which is debt settlement. When you do debt settlement, you don’t actually go through consolidation. What happens is that you make an agreement with your creditor to lower the amount that you owe and then pay the rest of your debt in lump sum. You can opt to use debt settlement with a lower interest rate and affordable monthly payments. As long as you have enough money to settle your debt, you don’t have to worry about paying for another expensive loan.
With debt settlement program, you only have to settle your debt for less than half of the total debt. You then need to pay the remaining debt within six years. In terms of benefits, you get better payment structure than with debt consolidation. It is also advisable for you to have at least six years of credit history built before you decide to use debt settlement program.
So which debt relief option is better? Actually it all depends on your situation. If you have a stable job and some savings, debt consolidation might be your best option. If you don’t have these things, then debt settlement is the better option. These are just some of the pros and cons of debt relief options that you should consider before making your decision. If you need financial advice, don’t hesitate to ask for it from a debt relief company because they know exactly what your financial status is.