Debts are destructive. They can destroy you financially as well as emotionally. It is often seen that many of you may buckle under the pressure of debts. You feel frustrated, dejected and can not find what to do. But, don’t despair, negotiatiating your way out of debt is possible.
However, these are the situations when you need to keep your cool and resort to appropriate debt elimination measures. Different types of debt elimination arrangements are available. Popular among those measures are debt consolidation, and debt settlement. Both these professional measures try to eliminate the debts that you owe. Importantly, both these measures are usually a far better option than filing for bankruptcy. In fact, bankruptcy is considered as the last resort available to you. Bankruptcy affects your credit score very savagely and your chances of obtaining a new credit with better terms and conditions are severely hammered. Anyway, here we briefly discuss about these two measures so that you can achieve freedom from debts.
The most positive aspect of a debt consolidation program is that it does not hurt your credit score at all. Rather, if you can properly follow the program, your credit score actually receives a boost.
The main purpose behind a debt consolidation program is to combine all your unsecured debts and then to fix up the single monthly payment. You have to just pay a single monthly payment amount to the consolidation company instead of making multiple payments to all your creditors. Importantly, the one regular payment that you make is lower than the total payments that you used to make to your creditors in a month.
In a debt consolidation program, one thing that is very important is the right selection of a debt consolidation company. This is very crucial since a dishonest company may actually aggravate your debt problem without improving it at all.
Again, to achieve freedom from unsecured debts, you may also choose a debt settlement program. However, in the case of debt settlement program, your credit score is slightly hurt. In other words, your chances of getting any new credit with better terms are slightly damaged too.
Here, a one time settlement amount is fixed after negotiations with your creditors. This settled amount is far lower than the total debts that you owe to several creditors. You just have to arrange that settlement amount and get the agreement of all your creditors so as to achieve financial freedom.