Did you know Alternative of Debt Reduction?

Alternative Solutions to Debt Reduction

These days there are number of people who are in debt. For many, debt is the root cause for all evils. If you’re struggling to cover your bills and are being hassled by collectors, you may curse the day you applied for your first credit card. If you’re straining to make minimum payments that feel like maximums, you may swear you’ll never borrow gain. If you’ve just graduated with massive student loans, you may question why you ever thought going into debt for education was a good idea.

There are few alternative solutions available for Debt Reduction. This includes debt settlement, and credit counseling programs. Let us look at the differences of both these programs:

Debt Settlement Program:

* A debt settlement program reduces the total outstanding debt by 50-70% of the original balance
* One can be debt free in as little as 3-36 months
* Usually provides a custom designed payment arrangement that fits your situation and can finally get you out of debt
* Not only reduces the total amount of debt, but also can get you out of debt and satisfy your creditors all at the same time
* Helps rebuild your credit and avoid bankruptcy
* It’s a win – win situation!!!! You are out of debt and you pay off creditors!!!!
* Debt reduction programs such as one offered by www.debtfreeafterall.com provides an easy and convenient payment method. They are professionals experienced in debt settlement, debt reduction, and debt negotiation.

Credit Counseling Programs:

* Credit counseling programs get some interest reduced without any reduction of the actual balance
* Scientific studies have shown that credit counseling does not work 95% of the time, because people get frustrated at the slow pace and lack of progress and drop out, only to find themselves back where they begin
* There are no credit counseling programs that will eliminate credit card debt faster while saving you a substantial amount of money
* Many clients who join credit counseling programs file bankruptcy like chapter 7 or chapter 13

Regardless of the program one should always find ways to eliminate debt and keep the finances under control. Given the above two options, debt settlement offers the best advantage for debt relief as it completely eliminates debt rather than prolonging it over an extended period as most credit counseling programs do.

Article Written by Naz

5 Benefit of Debt Settlement

5 Benefit of Debt Settlement that might be you never know..

1. Debt consolidation program primarily eliminates the portion of the total debt built up by accrued interest and other financial charges. Therefore, the total debt amount continues to grow over a period of time. When an individual default’s payment on any account the interest and financial charges are stacked over the debt. For example, if someone has principal balance of $2500 and interest and other finance charges added up to $3500 for a total debt of $6000, the consolidation programs can first eliminate the $3500 to bring down your debt back to $2500.
   
   
2. The consolidation company collects one single payment every month and will disburse funds to all the bills such as medical, credit cards, utility, etc. One need not remember the payment dates for the all their accounts and usually the payments are made in time so the late fees are minimized.
   
   
3. Although consolidation program cannot eliminate interest, it can lower the interest rates substantially. At the same time it can also minimize the monthly payments than what it was originally. For example, if the interest rate was 19% it can be reduced to 12% thus minimizing the debt accumulation.
   
   
4. Consolidation program prepares an aggressive repayment plan for the debtors willing to consolidate their debts. This helps the consumers to have extra cash on their hands, while they stay with the program without missing a payment.
   
   
5. People always like to pay minimum on their credit cards, which takes up to 12-15 years to clear the debts. As a result, one ends up paying a huge sum of money to the credit card companies over a period of time. A debt consolidation program can make one debt free within 2 to 4 years and provides financial freedom by saving money.

Ps: Did you agree or not??

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Did you know 2 Ways to Reduce Debt Burden?

Eligibility for federal student loan consolidation

DId you know what is that mean?

You are eligible to consolidate federal student loans when:

# You are no longer enrolled in school (defined as being enrolled less than half time)
# You must be in the "grace period" of the loan or must be actively repaying your loan.
# Most consolidation companies require a minimum loan amount, $10,000 is typical.

The difference between federal and private student loans

Federal student loans have advantages over private loans. For example, interest on the loan is tax deductable, the loan can sometimes be forgiven for certain types of service, and you can sometimes defer payments on the federal loan if you go back to school.

Private loans don't have these advantages - they are really just loans either secured or unsecured, and you have to pay them back just like any other loan.

So, it's important to not consolidate federal and private loans together. Consolidate all your federal student loans first, then separately consolidate your private loans. If you were to mix the public and private loans you would have to take out a single private loan that loses all the benefits of the federal loans. Keep government student loan consolidation separate from private loan consolidation.

Student loan debt

About 50% of recent college graduates took out student loans, with an average borrowed around $10,000 (ref. 3). In the last three years, rates have fallen very low. As of fall 2003, Stafford loan interest rates were in 3-4% range (ref. 2). Consolidation interest rates can be much lower (under 2%), but this comes with very specific requirements - like good repayment history.

Like any debt, student loans can influence your credit and your future decisions. Students who borrowed a substantial amount for college (more than $5000) are less likely to pursue higher education (ref. 3). In addition, student loan debt that exceeds 8% of your income can be seen negatively when your credit gets assessed for future loans.

Two ways to reduce the debt burden are:

1) reduce or eliminate the principal balance. Specific types of loans can sometimes be forgiven by service or other higher education - look into the specific student loan program you have.

2) Reduce your monthly payment. Since debt burden is measured by comparing your loan payment to your income, reducing your payment helps your credit evaluation.

Ps: Ok. Did you understand now?

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