Debt Settlement- Fastest Way to Reduce if Not Eliminate Debts
One of the fastest and cheapest ways of eliminating the multiple small debts owed to creditors is debt settlement. Debt settlement is also known as debt consolidation. Debt consolidation is simply the act of using other forms of capital to settle other debts. In other words, it is simply the act of taking a single secured loan to settle multiple unsecured debts. There are various reasons as to why a debt relief process like this might be necessary.
When a person decides to use debt settlement, he or she is trying to make a better financial decision by paying less than what is due on the debts. This is accomplished by using the funds provided by the consolidation company to payoff the debts that are included in the debt repayment program. In most cases, the program will have a lower interest rate as compared to the combined interest rates of each of the debts. The amount of the monthly payment, which can be reduced is dependent upon the negotiation process that takes place between the debtor and the company handling the debt repayment program.
Consolidation of debts can be done through a formal process or informal one. The informal method is often used, as there is less of an impact on credit scores and due process in the consolidation process. Under the formal method, there is more documentation that must be submitted to the lender and there may be additional fees charged for the services involved. Under the formal method, the debtor would be able to understand more clearly the implications of making the repayment and may not be so willing to negotiate as they would if the debt consolidation company were an individual person. Most people end up going with the consolidation company because they do not fully understand all of the implications of making the repayment.
The consolidation of debts can also be done through a direct application. There is no need for a loan in this situation. The borrower may be required to prove to the lending institution that they have an income and a regular source of funds that can cover the full monthly repayment on the single consolidated loan. It must be understood that the interest rates for these types of loans are usually a bit higher than other forms of debt consolidation. However, the goal of this process is to save money in the long run by decreasing the total amount of interest paid on credit cards debt.
The best option for this purpose would be a debt relief company in Louisiana. Debt counsellors have a lot of experience in working with different types of lenders. They will know the advantages and disadvantages of different consolidation programs and how to make the best options for each individual client. Their services can also be used when there is a co-signer available to make the loan more manageable. The debt counsellor will use their expertise to get the best possible interest rate for the loan. This would greatly reduce the monthly repayments of the debtor.
The process of consolidating debt is not as difficult as some consumers may think. A good debt consolidation loan should offer all of the convenience and benefits that consumers are looking for in order to successfully manage their credit card debt. A debt counsellor can be the best option available for this purpose.