A simple definition of the term debt settlement is any term or method used in order to help an individual manage their debt. This includes services such as debt consolidation, negotiation of debts, bankruptcy, personal loans, as well as any other technique that helps consumers meet their debts. Cundo refers to negotiation of debts, used the term more commonly the term debt consolidation. The idea of consolidation of debts is as follows: an individual enters the program, and this allows that your monthly payments and interest rates decline, bringing together all your debts into a single. Then once a month each individual make a monthly payment to the consolidating company who undertakes to pay to the different banking entities where the person owes money. The theory behind this is that the customer pays less interest rates while simplifying payment processes, since you must not pay you but to a company. However the consolidation also has its cons. Normally the program lasts for 5 years, and even when the person is paying interest rates lower, the long duration of the programme means that the customer pays a great deal of interest throughout the program.
Consolidation companies also charge a monthly Commission of $30-$50 totaling and increases in time. And the problem most large is the quality of some consolidation companies, a large number of companies without scruples that do not meet the promises that make its customers. Finally the participation in these programmes can have negative effects on your credit score that can not be repaired until the program is complete. Another way of very popular debt elimination is debt settlement option. This practice involves negotiating and reaching an agreement with the credit companies. Many times lenders accept receiving 40-50% of the value of the debt to eliminate it. This option can also have problems if it is with companies eliminating debts to unscrupulous While they charge commissions very high gain ill-treatment and produce little.
How debt consolidation can also affect your credit score, but as this program only lasts 2 to 3 years it can be rebuilt more quickly. Debt negotiation can be a very effective way to put an end to their problems, when individuals choose either company they want to work. There are numerous methods included in the definition of negotiation or elimination of debts, which include declaring bankruptcy, refinances mortgages, purchase a loan of consolidation, etc. But the aspect most important to remember is put in a balance the advantages and disadvantages of each option very well. Be sure to choose a program and a company that fits your needs and meet your expectations. Scott Wallitsch is certified by the IAPDA as debt negotiator for DebtorSolution. He provides advice on Elimination of debt and negotiation of Deudas(Debt Settlement) people who are seeking to become financially and economically independent.