Debt Consolidation and Debt Negotiation are two ways to manage outstanding debts. Whether from credit cards, loans or other accumulated debts, the decision to resolve this issue can go a long way to repair a damaged rating. There are some real differences between the two methods.

Debt consolidation can be done in several ways. One is to consult with a bank that specializes in this process and see what type of programs are available. In this case types and amount of interest will be the deciding factors. It is possible the lender can help negotiate terms with the creditors and lower amounts. It is important here to have accurate documentation and work to avoid penalties and defaults which will show up on credit ratings. You should try your best to find the best terms, payment schedules, and lowest interest, from the the bank you decide to work with. While many lenders advertise this service, it’s important to investigate their reputation, any complaints they may have, and other licensing issues.

Debt Negotiation

The other method, debt negotiation is often attained through the services of an agency, usually a nonprofit, that assists debtors who want to earnestly pay off debt. Through agreements, the debtor and agency work to arrange payment terms, lowering interest rates, and often times the amount owed. The agency negotiates with the creditors and arranges terms and a payment schedule and monthly amount. The agency pays the creditors on behalf of the debtor and in time the debts are paid and credit score is restored or even goes higher. The debt negotiation advantages are numerous. Simplification, better terms and payment schedules, and often lessening of overall expenses are genuine benefits of this method.

Both debt consolidation and debt negotiation are convenient ways to deal with accumulated debt. Many Americans are trying to repair credit scores that were damaged during the recent economic downturn. In many cases the interest on credit cards, lost wages and jobs all added up to serious hardship. Being able to repair and rebuild credit will help restore the previous standard of living and contribute to the overall financial recovery and consumer confidence. Everyone will benefit from approaching debt responsibly. These two methods and the existence of reliable and ethical agencies are viable solutions to this issue.

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