June 15, 2024


Delighting finance buffs

A Brief Comparison Between Debt Negotiation And Bill Or Debt Consolidation

When you find yourself very deeply entrenched in debt and are not able to extricate yourself from your predicament, look up the most popular solutions, i.e. debt or bill consolidation and debt negotiations. These two are the only way you can get out of unmanageable debts. Let us what each of the terms mean.

Bill or Debt consolidation – this is a loan that is offered to people whose credit is so damaged that they are no longer eligible for any regular types of loans. When you avail of this loan, you enter into an arrangement with the bill consolidation agency whereby, you consolidate all your debts to them, and you pay them one single installment towards it. In turn, they would take care that all the debts that are outstanding your name would be cleared and the damage to your credit rating controlled to the maximum possible extent.

There are many benefits that would fall out from this arrangement:

You would be required to pay only one installment (to the debt company) versus the multiple deadlines and payments you had to do before you tied up with them

  1. The payment per month is greatly reduced, since the debt consolidation company is not bearing the majority of the repayment burden
  2. The overall debt amount is reduced by anything between 20-60% which makes a great difference to your overall repayment burden and schedule
  3. Your creditors will stop harassing you since now they would have to deal with the debt consolidation company directly (who will act as a buffer between you and your creditors)
  4. You will have reduced interest rates on your credit card bills (negotiated by the bill consolidation agency)
  5. Your late fees, penalty fees, and a good amount of the compounded interest might be waived at the intervention of the bill consolidation agency

For all these services, you would be required to pay a fee of US $30-60 per month, which goes to the administrational expenses of this agency.

Debt Negotiation – this is a very similar option to the debt consolidation loan – the only difference is that it will do most of your work for you. A debt negotiation agency would take over the payments in the similar manner as the debt consolidation loan agency does; the difference lying in the fact that they are not issuing you any loan – but using your own money for the same. This option is particularly open for those who are unable to self-impose financial discipline and manage their debts.

You are eligible for this program if you have been defaulting for about three months or more from making your payments. In a very similar manner to the operations of the debt consolidation loan agency, the negotiation agency too would ensure that your overall amount owed to your creditors would be minimized to the largest extent possible.

While you will be relieved that your debts could be paid without incurring any additional loan (as with the debt consolidation loan situation), you will find that often