The Difference Between Debt Consolidation & Debt Negotiation

When you are placed in a spot where debt assistance is needed you can easily be torn between a few options that seem more than reliable. Of the reliable choices there are two that are without a doubt most popularly debated over, especially when held in two separate hands. In one hand you have the financial fixer of “debt consolidation.” In the other hand you have the financial alleviator of “debt negotiation.” Each are, on their own, very resourceful financial tools when it comes to correcting debt blunders and keeping them from reoccurring.

But, there are some definitive differences between the two. And they are so drastic that without mentioning them while going through the process of selecting between the two, you can easily find yourself picking the wrong, or less helpful choice.

The Financial Fixer: Debt Consolidation

With debt consolidation you are seeking some definite fixing. And most times you will get it. “How,” you ask? Debt consolidation takes all your spread out debts and gathers them into one large, more concentrated debt total. Usually, services offering debt consolidation have repayment plans that have been arranged prior with the majority of collection and credit card companies.

What occurs when you sign up for a debt consolidation program is some relief in how much you pay. An offer that provides you with a lower overall monthly payment (which is thanks to a lower interest rate arranged with involved creditors). This payment is, most times, significantly lower than what credit card companies will give you. In effect, you save a considerable amount of money each month.

The Financial Alleviator: Debt Negotiation

Also sometimes referred to as debt settlement, debt negotiation is the second option. For those who can’t actually go through with a debt consolidation program, debt negotiation is the fall back choice. If minimum payments can’t be made and repayment plans aren’t possible then negotiating is the next logical step to solve debt and credit balances.

While going through a debt negotiation you will be paying realistic monthly payments. At the same time that this occurs your company will actually be negotiating with your creditors for a lower total debt payoff, one that usually is agreed upon at around half of your due balance.

The Benefits of Both

The benefit of debt consolidation is clearly the organized and consolidated aspects that are wrapped up within it. Through bringing all your debt together one lump sum you will have less to stress about overall and, to boot, have an easier single payment to deal with. Factor in the lessened interest rates involved and there are even more additional savings for you to profit from in the long run.

On the other side, an obvious benefit to debt negotiation is that you stop dealing with hassling creditors trying to endlessly contact you. These annoyances are dealt with by your debt negotiation company. And, of course, you reap the benefit of getting your debt total whittled down to nearly half of what it was originally, all through mere negotiation.

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