Debt Consolidation for Debt Relief

11/12/2010

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People have been scrambling recently in efforts to get their unsecured debt in check.This toxic debt consistently drains away hard-earned income, something they can ill afford from this challenging economy.Credit card debt typically is the one that causes the most serious problems, but other reasons for unsecured debt (personal loans, etc.) can intensify the debt scenario too.Credit card rates can actually reach 29.99%, although it is a bit more common for them to be in the 18% range.Seeing that savings accounts are earning closer to 1%, the absurdity of people paying these rates on their debt becomes abundantly clear.This truth is not lost on most consumers, many of whom have either started the debt relief process already or are actively considering which option they'll pursue.All who have not yet moved forward with a specific debt solution would do well to contemplate acquiring the advantages of some form of debt consolidation service.

Qualifying for a financial loan at a lower rate that may be utilized by consumers to consolidate the credit card debt was possible not that long ago. Dramatic alterations in the lending industry since the recession have made it almost impossible for them to be able to get such a loan.These days debt management and debt settlement services offered by debt relief companies are the primary means by which consumers can benefit from debt consolidation. While there is dramatic difference between these two credit card debt relief solutions (credit card debt settlement being riskier), both solutions incorporate debt consolidation in their processes.Consumers consequently can benefit from the lower interest rate and the consolidated payment structure on their debt.Previously when lenders would approve debt consolidation loans, the individual debts were then paid off and their balances combined in the new loan.On the other hand, the debts now remain separate in the new method involving a debt relief company.The credit card debt relief company now receives the consumer's consolidated monthly payment, and it becomes their responsibility to distribute the proper portion to each of the consumer's creditors.
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Solutions for Unsecured Debt Problems

11/10/2010

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With the economy showing precious few signs of making a turnaround any time soon, consumers are taking a close look at their finances while keeping a cautious eye on what the future may hold. Part of this caution is reflected in the fact that millions of consumers have taken steps towards debt solutions in an effort to do something about their unsecured debt problems. There is little doubt that the chief culprit among the unsecured debts is credit cards, as rates of between 18% and 29.99% are not at all uncommon for consumers to be charged. When this hardship is added to all the others that have descended on them during and since the recession, it isn't difficult to understand why so many of them have had little choice but to make just the minimum monthly payments on the accounts. The combination of the high rates and the minimum payments is ominous, and typically leaves the consumer with the prospect of needing decades to pay off the debt completely. This sets the stage for the current popularity of debt relief among consumers, and fortunately there are some choices that can prove to be effective.

Budgeting is the first line of defense for consumers against high interest credit card debt. There are times when the adjustment of expenses and income can prove to be sufficient to bring about a much faster payoff of the debt. When this is not enough, there are credit card debt relief companies that offer three main debt solutions. Credit counseling offers indebted consumers a number of advantages through a debt management plan (DMP) that include reduced interest rates, relief from collection phone calls and payoff schedules of just 5 years or less, and in addition there is no credit score damage to be concerned about. Debt settlement offers the potential to make sizable reductions in the total debt amount, but the debt problem needs to be serious enough to warrant the credit damage that this debt solution is guaranteed to bring about. It requires the consumer to cease all payments to the creditors until a settlement is reached. Beyond the credit damage there are also other serious risks that need to be factored into a decision about using this debt solution. Bankruptcy is another debt solution that may be right under certain circumstances. The credit damage resulting from either Chapter 7 or Chapter 13 bankruptcy is severe and lasts for from 7 to 10 years. But it may be the only viable option for consumers with truly insurmountable debt problems.
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