Debt Consolidation
Debt consolidation is one among many debt reduction programs available to someone needing help to become debt free. Debt consolidation is a term generally used to describe debt repayment plans which may include debt management plans and debt settlement plans. Other debt settlement companies use different terms for these debt reduction programs but they are all basically the same, each with slightly different features, just different names. These plans allow you to combine your monthly payments to your creditors into one monthly payment combined with lower interest rates and other creditor benefits. All of these plans are designed to get you out of debt as quickly as possible.
The best plan for you?
Which plan will work best for you depends on your situation, the kinds of debts you have, your income and ability to pay and what you believe and agree to what is affordable for you. A debt counselor will help you through the process of selecting which plan will work best for you. Some companies have online guides to help you select options to help you understand and learn how these debt reduction programs work.
Debt Management Plans
A debt management plan is a mutual agreement between you and a credit counseling company in which you agree to repay all of your unsecured debts in full over time, without taking any more debt. With a debt management plan, most if not all of your creditors will agree to substantially reduce your interest rates. Future fees for late payments and over the limit penalties can also be avoided with this debt reduction program which can bring your account into current status.
Debt Settlement Plans
If you can not afford to pay your debts in full, debt settlement services could be your alternative to bankruptcy. A debt settlement services option will allow you to pay your debts in part. On a debt settlement service agreement, your monthly payments are typically held in a protected account and your provider works to negotiate with your creditors for a less-than-full repayment.
Over time, this allows deals to be made with each of your creditors separately and allows you to become debt free usually in 3-5 years.
During the time on a debt settlement service agreement, creditors may choose to continue collection activities, including judgments, lawsuits, and wage garnishment. It is important to consider these risks when choosing a debt settlement service.
Reminder
In my next post, I will discuss the pros and cons of each of these alternatives. Also, remember that any of these alternatives will work only if you follow the program as it is designed and to be completely successful, you have to learn and live the correct principles of debt free living.
Live life to the fullest!
Thursday, July 30, 2009
Thursday, July 16, 2009
Principles and Debt Reduction Programs
The culture of debt that is now prevalent in all levels of society have created a proliferation of businesses offering help to relieve those afflicted with the heavy burden of debt. This help come in the form of debt education, debt reduction programs, debt elimination strategies, tools, counseling services or a combination of any or all of these.
These products and services are advertised on TV, radio, newspapers, magazines, billboards, and the Internet. Google the words debt, credit card debt, credit counseling, debt elimination, debt reduction programs, or any word or combination of related words will give you thousands, if not millions of results. All of these, you already know, but choosing the right company, products, debt reductions programs, or services that is right for you can be daunting and difficult considering the gazillion of options available.
Before making any choice of the debt reduction programs available, may I suggest the very first step you or anybody in debt need to take: STUDY and LEARN! They say knowledge is power but I say correct knowledge is even more powerful. Acquiring the correct knowledge will give you more power in your quest for a debt free life. In this case, learn the correct principles of debt free living. Learning and living the correct principles of living a debt free life will lead you to debt free living as much as living a healthy lifestyle will give you better health. Agree? You probably say, "Yeah, but what if I am already in debt, how will learning these correct principles help me get out of debt?" Well, if you find yourself in a hole, shouldn't the first thing you do is stop digging so you don't go any deeper? Learning the correct principles of debt free living will help you stop digging. In other words, you are now in a hole because of the bad habits you have learned through the years and by learning and living correct principles of debt free living you will unlearn those bad habits and learn new good ones. Then you become a changed person. That changed person will now become more powerful in getting out and staying out of debt using any of the debt reduction programs he may choose.
Learning the correct principles of debt free living is learning the why of debt free living. Studies have shown that people who have learned the why of debt free living have more success in getting out and staying out of debt more permanently than those who have learned just the hows. Those who have learned the hows and not the why had temporary success. They had gotten out of debt but have returned to being more in debt because they have not changed their ways.
So, go buy a book about this subject. Study and learn those correct principles, and most importantly, apply what you learn so that the debt reduction programs you select will be more effective!
Live life to the fullest!
These products and services are advertised on TV, radio, newspapers, magazines, billboards, and the Internet. Google the words debt, credit card debt, credit counseling, debt elimination, debt reduction programs, or any word or combination of related words will give you thousands, if not millions of results. All of these, you already know, but choosing the right company, products, debt reductions programs, or services that is right for you can be daunting and difficult considering the gazillion of options available.
Before making any choice of the debt reduction programs available, may I suggest the very first step you or anybody in debt need to take: STUDY and LEARN! They say knowledge is power but I say correct knowledge is even more powerful. Acquiring the correct knowledge will give you more power in your quest for a debt free life. In this case, learn the correct principles of debt free living. Learning and living the correct principles of living a debt free life will lead you to debt free living as much as living a healthy lifestyle will give you better health. Agree? You probably say, "Yeah, but what if I am already in debt, how will learning these correct principles help me get out of debt?" Well, if you find yourself in a hole, shouldn't the first thing you do is stop digging so you don't go any deeper? Learning the correct principles of debt free living will help you stop digging. In other words, you are now in a hole because of the bad habits you have learned through the years and by learning and living correct principles of debt free living you will unlearn those bad habits and learn new good ones. Then you become a changed person. That changed person will now become more powerful in getting out and staying out of debt using any of the debt reduction programs he may choose.
Learning the correct principles of debt free living is learning the why of debt free living. Studies have shown that people who have learned the why of debt free living have more success in getting out and staying out of debt more permanently than those who have learned just the hows. Those who have learned the hows and not the why had temporary success. They had gotten out of debt but have returned to being more in debt because they have not changed their ways.
So, go buy a book about this subject. Study and learn those correct principles, and most importantly, apply what you learn so that the debt reduction programs you select will be more effective!
Live life to the fullest!
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