Debts are big problems these days and many are suffering because of them. Are you onet of the ones who succumb to these kinds of problems? Do you want to take better control of your debts and your life? Then you should try debt management plans. There are a lot out there that offer debt management like debt consolidation and debt settlement.
Between debt consolidation and debt settlement, you choose the one which is most suitable to your situation. Debt settlement companies try to convince your creditors to cut down your debts for an upfront payment to them. For example, you owe a company $1000 and you will request to just pay $600 money down and put away the other $400. This seems to be a quick and easy way to get out of your debt and an unfair way for the lending company.
However, the company accepts this offer as they know that they will spend more on waiting for the whole amount to be paid off so they will take the money. For the borrower, it is an easy way out however this kind of debt transaction will reflect on your credit history thus affecting your rating score. When companies see this transaction on your credit history, they might not accept your application for another loan for a car, house, etc, and it may even cost you a job or a promotion.
On the other hand Debt Consolidation is rather useful for those who have a lot of debts to different credit companies. Debt consolidation works by combining all your existing debts into one consolidated debt. It offers easy management as you will receive only one bill at the end of the month and it has a lot less monthly payment bill than your previous debts. The downsides of debt consolidation are a longer debt payment period and the requirement of collateral.
Although you would pay less monthly, you would be paying for a longer time period which it follows that the longer the period the more money it will cost in the long run. Next, consolidation requires collateral such as a house, a car, depending on how much you owe. This brings the risk of having your property possibly forfeited if you miss a payment. The collateral serves as insurance for the company in the event the Borrower does not pay and this also forces the borrower to pay the bill if he does not want to lose his property.
However good the programs seems for debt solutions, there is always a disadvantage to each. In order to be in control of the situation, the borrower must weigh the odds and choose what’s best for him. Then again, it all comes down to the person’s responsible debt management and being in control.