Debt Consolidation Does Not Always Require a Loan
Often you will see advertisement for debt consolidation as a form of debt relief. Debt consolidation is a way to help with multiple high-interest debts and can be a good solution for some. Generally speaking, debt consolidation requires getting a new loan large enough to pay off multiple smaller loans. Sometimes, however, debt consolidation does not require a loan. Sometimes it means taking multiple loan payments and consolidating all of them into a single payment. This is the type of consolidation found in credit counseling and debt settlement programs where no loan is involved. Too often people are led to believe they have signed up for a new consolidation loan when in fact the debt relief company signed them up for a debt settlement program. In this article we will teach you about what to expect from both forms of debt relief. This way you will be prepared to ask the right questions the next time you contact a debt relief company.
What is the difference between debt consolidation and debt settlement?
First, let’s discuss how these types of debt relief work. Debt consolidation is exactly how the name suggests. It’s a way to take multiple debts and consolidate or combine them into one loan. If approved, the company will provide a loan or line of credit to payoff your other debts. For this to be a debt relief option these companies will sometimes offer a lower interest rate or longer monthly term to help reduce your monthly payment amount. Depending on your debt situation, this can be a valid solution to help relieve you from high monthly payments. In the end you will pay the entire debt owed plus accumulated interest. But what if you are already delinquent on accounts or have an extremely low credit score and not approved for a consolidation loan? This is when debt settlement can be a viable solution. Debt settlement is a way of negotiating your debts to reduce the total amount owed. This option can get you out of debt faster and often at a much lower monthly payment. This process works with your existing debts therefore it does not require any additional loans to pay them off. Debt settlement can be achieved by the debtor, but due to the pressure of negotiating with creditors, and the complexity of juggling multiple accounts it is wise to hire experienced professionals to do this work for you.
Debt Settlement Can Be Considered a Form of Debt Consolidation
In some cases when using a debt settlement company, it can be a form of debt consolidation. A debt settlement company will have you put funds aside in a savings or escrow account. This will be a monthly deposit in an amount agreed on between you and the company. These deposits will be saved and used later to pay your negotiated debts. The settlement company will manage all your debts that you enroll into the program. So, in a way you are consolidating numerous accounts into one program, thus you are consolidating numerous payments into a single payment.
I need help now, which option should I choose?
It all depends on your personal situation and the type of debt you have. If you are already falling behind on your credit card payments and have a legitimate hardship preventing you from making some or all your payments, then debt settlement may be a good choice. Alternatively, if you have under $10,000 in debt on multiple cards, and looking to combine your payments into one, then maybe a consolidation loan is your best option.
New Era’s certified debt specialists have over 20 years of experience. We have a detailed application process ensuring whether our debt settlement services are right for you or not. New Era will never suggest you enter a debt relief program if we feel it’s not a good fit for your financial situation.
Beware of Untruthful Debt Relief Companies
Debt can be extremely stressful and overwhelming. Do not choose a debt relief company out of desperation. When seeking a company offering negotiation services try asking our 14- questions to make sure they are a legitimate debt settlement company. Also, if a company is advertising a consolidation loan be sure they are not forcing you into a debt settlement program without you knowing. Dan Smith, President of New Era says, “There are too many companies that are not following ethical routes to offer debt relief services and resolving debt. It is important to do your research before choosing a debt relief company. We are transparent and will tell you, debt settlement is not for everyone.”
About New Era Debt Solutions
New Era Debt Solutions is a debt settlement company that helps people dramatically reduce their debt obligation and become debt-free. Since 1999, New Era has settled over $250,000,000 in debt for their clients.
New Era is a pioneer in the debt settlement industry and has delivered over 20 years of unparalleled service by putting clients and their needs first. Proud of their reputation for truth and transparency, New Era has helped thousands of clients become free from the burdens of debt.
If you are struggling with overwhelming debt don’t wait, there is a program that will work for you. Contact us today for a free debt analysis. Visit https://neweradebtsolutions.com or contact New Era by calling 800-527-4421 or email [email protected]