Debt Consolidation, Credit Counseling, Options for Paying Debt Off

Debt consolidation, credit counseling and debt settlements are all options for paying off your debt. Yet, not all of these options are the best choice for everyone. When it comes to how you got to this position, little matters. What does matter is how you will get out. Without becoming overwhelmed and confused, you need to take a serious look at what your options are. To help you, there are several things that you should consider and that’s what is pointed out here.

Debt consolidation vs Credit Counseling

Debt consolidation facts:

·         This is a loan that you will take out that will be used to pay down your credit card debt or other debts that you have.

·         Your debt is restructured so that you get to start over with this new lender.

·         Your credit cards are paid off and you can begin to start rebuilding your credit rating.  You can also rebuild your credit by using a debt consolidation loan that is paid off timely.

·         The best interest rates that are offered on these debt consolidation loans come from those that use secured loans.  These are secured through the equity in your home (although you can secure them with other types of assets as well.)

·         You may not qualify for a debt consolidation loan if your credit score is very poor or you do not have a steady flow of income.

·         If you qualify for a personal debt consolidation loan, you are likely to pay high interest rates.

Credit counseling facts:

·         You will work with a counseling company to determine what your monthly budget should be.

·         Your counselor will work with your lenders to help get your interest rate lowered on your loans and other debts.

·         The credit counseling company will be paid one monthly payment to pay off your creditors. Generally, this amount will have to be automatically withdrawn from your account each month.

·         Some creditors will lower fees, will reduce charges and will lower your balance for the time period that you are working with the counseling agency.

·         You will not be erasing your debt, but working on paying it down.

·         For some, credit counseling can have a bad effect on their credit especially if they do not continue to pay it down on a timely basis.

Debt consolidation? Credit Counseling? What is the right choice for your specific needs?  Look at the options that you have and compare how they affect your needs. In the end, you want to determine which options work the best for you, not the lenders and not the companies. You can then pull yourself out of debt.

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