Debt Consolidation

Debt Consolidation is nothing more than the act of consolidating, combining, restructuring, or organizing your bills. The term debt consolidation just so happens to be universally known - so every industry from credit counseling agencies, and debt settlement companies to lenders use (and abuse) the phrase to attract a consumer seeking debt assistance and help.

For debtors whom find themselves in debt and unable to pay it, or consumers that are fed up with paying minimum payments that do nothing to the principle amount owed - debt settlement can help, and yes debt consolidation does take place - as we consolidate the total amount owed on your credit cards into one consolidated, Lower Payment.

Often, consumers make the intellectual error of thinking that Debt Settlement and debt consolidation are the same thing. Nevertheless, there are some distinguishable similarities between these debt relief phrases. Debt consolidation is the process of combining multiple unsecured debts which is established before even determining eligibility with the Debt Settlement Company, after / or if underwriting approves your debt - one monthly payment is set in contract.

Debt Consolidation - Debt Settlement Myths and Misconceptions

Myth - Debt Settlement and Debt Consolidation Damage your Credit.

Truth - According to MyFico.com who created the point system (algorithm that determines your credit score) they clearly state that 30% of your credit core is based off your debt. Additionally, the purpose of debt settlement is to close your accounts and payoff the debt for a negotiated / less amount thus lowering your debt-to-income ratio. In plain text, the less debt you have - the more willing a lender will be to extend credit / loans. In short, debt settlement and consolidation will initially affect your credit until the debts are paid off, seeing as how we settle one creditor at a time your credit will start to improve during the first year in the program. As each account closes your credit score will replenish.

What debt settlement does affect concerning your credit score is the "payment history", but our average client has already been 30 - 120 days behind. So, at this point that factor is already damaged. Don't fall into the creditors trap, and stay in debt - those minimum payments are more than likely contributing to an outsourced call center. Take action, and get your debts paid off for less with an American based, and operated Debt Settlement Company.

Misconception - Debt Consolidation and Consolidation Loans

Oftentimes, consumers seem to believe debt consolidation is when a company pays off, combines all their existent debt, then introduces a new interest rate, and one new payment. However, the aforementioned statement does not describe debt consolidation, it depicts what is commonly known as a consolidation loan which is available to consumers with near perfect credit or collateral. A consolidation loan is nothing more than re-financing your unsecured debts - at the same time converting your unsecured debts into secured debts. Meaning your collateral / home would be at stake (in the event you default on payments). Our take, why risk your home, and well being over credit cards.

Consolidation loans are just big loans that payoff a bunch of small loans, credit cards, or credit lines. However, the balance stays the same and you're back at square one, paying interest every month to larger financial institutions who are known for consolidation loans such as (wells fargo, countrywide financial, or chase).