And You Continue Saving Till You Have Paid Off All Your Debts

Category: Finance, Credit.

Both debt management and debt settlement services are similar but with a minor difference. The function of debt management services is to help their clients get rid of their existing debt.

While debt settlement services only concentrate on eliminating your existing debts, debt management services also provide you with tips on how to remain debt free even after you get rid of your earlier debts. And the better services will go beyond that and help their clients to stay clear of future debts once they have successfully eliminated their present debt. As a debt management service provider, they have a much greater leverage to convince the bank than individuals who had loaned money. The debt management services also negotiate with the client s creditors and obtain better deals for him than he could have got himself. Negotiations can lead to friendlier repayment terms which are suitable for the client. The main objective of debt settlement is similar to what it is of credit counseling and that is to make their client get rid of the debts they have accumulated.

Otherwise dragging the entire thing to the bankruptcy court doesn t help either the bank or the individual. But there is a difference in the way the two perform. That is something remarkable. While the credit counseling or Debt Reduction method work on reducing the rate of interest for you to pay off your debt more easily, the Debt Settlement method actually reduces your original principal amount of loan by up to 50% -75% . But one must also understand that there are a few things one should be careful about. It should not be used as a method to pay less and get off your debts. First of all, debt settlement is only for those who have just no option but to go bankrupt.

You will only be considered if you are really in no position to repay the original debt. You will need to put in an exact amount every month. Once you join an agency you will need to pay a fixed some of money which is then deposited in an escrow account. The amount will be worked out by the agency in discussion with you. And then the negotiations start. It is only after you have gathered enough money in your escrow account that your debt Settlement agency will contact your creditors. As deals get struck you pay off the debt with your money accumulated in the escrow account.

And you continue saving till you have paid off all your debts.

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