Counseling Compared to DIY
There are a lot of people out there that have debt that turn to
consumer credit to get it fixed. There are also a lot of people
who turn to debt consolidation. When you have debt, how do you
know which way to go to get the assistance that you need? It
depends on your situation and what kind of money you have as to
which way you should go.
For many people counseling will be the way to go, only because
debt consolidation – depending on how you do it – can be
negative to your credit report. But credit counseling can help
you get a handle on your finances as well as figure out what got
you here in the first place. A credit counselor will look at the
debt that you have and work with you to come up with a plan to
pay it all back. They will help you contact your creditors and
work towards paying back your debts over a period of time, and
often the credit cards, etc. will stop charging you interest and
will work with you to come to a clearer credit rating.
A debt consolidation can be handled two ways: one in which you
simply compile all of your debts into one loan and then pay that
back, or one where you settle for a portion of your debt and
then pay that back. The former will have no affect on your
credit, whereas the latter will hurt it. If you choose the
former, you will simply add up all of your debts and put them
into debt consolidation loan. This loan will then be paid on
each month by you, and you will use the money to pay off all of
your existing debts in full.
But one that involves a settlement has a company negotiating for
you as to how much money is owed and how much you actually have
to pay back. This means that you are not paying back the full
amount and it will most likely go on your credit as a negative.
There is only a little difference on your credit between a
settlement and a bankruptcy so keep that in mind.
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