Debt Negotiators vs. Debt Management Groups to Consolidate Credit Card Bills |
By Kari Johnson on December 16, 2010
.jpg.aspx?width=75&height=75) In a time when so many people are having financial trouble, "debt" is not a foreign term. The most common is generally from credit cards. With so much debt, it's no surprise that people are looking for ways to consolidate their credit card bills. Popular ways include getting help from debt negotiators or debt management groups.
But what are debt negotiators and debt management groups? And how can they help you to consolidate your credit card bills?
A debt management group consists of financial experts with the same goal as a debt negotiator: to lessen your debt. Debt negotiators talk to your creditors and attempt to cut your debt by up to 70%. While debt management groups can use this method, they usually contact creditors to lower interest rates and work with you to create a plan for further debt management.
One needs to be careful about how they choose to consolidate their credit card bills. While using a debt negotiator can reduce the bills into one lump sum, easy to pay off to avoid bankruptcy, they can also be a bad idea. If your debt negotiator asks you to pay them monthly instead of your creditors while they wait to have enough to make your creditors an offer, this could cause the same sort of problems on your credit score as a bankruptcy. In the time it could take your negotiator to collect enough to make an offer to your creditors, enough time could have passed for a “charge-off” onto your credit report.
In addition to this problem, debt negotiators sometimes charge large fees, whether upfront or dependent on your debt. IRS sometimes taxes forgiven debt as income.
With these factors, why does anyone use a debt negotiator? With their experience, they can get rid of debt, stopping the piling interest that would drive up the bills even more, and alleviating some of the stress from avoiding collectors. Debt management groups, on the other hand, tend to make the problem more manageable than to completely eradicate it and form plans that take a little more time than using a debt negotiator.
One must keep all of these things in mind when deciding what method to use to consolidate credit card bills. Whichever method you choose, you should have been in debt for an extended amount of time and be in well over your head with it before taking either drastic measure.
|
Current Rating: 0 (0 ratings)