Will Debt Consolidation Without a Loan Help You?
If you are struggling with high-interest credit card debts and searching for proven ways to find relief, maybe you have considered debt consolidation loans. Today, many individuals and families, including those who live in Indiana, are also in need of debt relief not just from credit card debts but also from unsecured debts, such as medical or doctor bills, or department store charges.
The good news is you may be able to consolidate your unsecured debts without having to take out a debt consolidation loan that could require you to put your home or other assets at risk. To see if you qualify to consolidate debts without a loan, request a free debt relief analysis and savings estimate. Start by answering a few, simple questions here.
For many of these consumers, credit card debt is a serious problem that causes them to lose sleep, face emotional and mental stress, and worry about their family's future. Fortunately, there are several debt relief options available - including debt consolidation loans, debt management through a credit counseling agency, or debt settlement.
A DEBT CONSOLIDATION LOAN typically involves combining your high-interest credit card debts into one, lower interest loan. On the other hand, a DEBT MANAGEMENT PLAN (DMP), or debt consolidation program, typically involves combining, or "consolidating," your debts into one, more structured, and more manageable payment made to a credit counseling agency to be distributed to individual creditors.
Finally, DEBT SETTLEMENT is a process whereby your goal is to settle or negotiate with creditors for substantially less than the actual debt amount. Recently, these debt relief solutions have become increasingly popular alternatives to bankruptcy, which can have a more serious and longer lasting impact to personal credit.
Debt Consolidation vs. Debt Consolidation Loans
The term "debt consolidation" has come to represent a range of debt relief options. However, what debt consolidation typically involves is combining or consolidating unsecured debts into a single, more affordable, and more manageable monthly payment made to a credit counseling agency. Some people refer to debt consolidation as a debt management plan or DMP.
When you enroll in a debt consolidation program, credit counselors will assess your finances and debt amounts. Once they have all the information they need, they will typically develop a strategy that can help reduce your debts and submit proposals (on your behalf) to creditors asking for reduced interest rates, or the waiving or elimination of any late fees or penalties - generally, they will ask for more lenient repayment terms.
Creditors that agree to the proposals will be placed into the debt management plan. The goal of debt consolidation is, with a single, more structured, and more affordable payment plan, you can typically direct more of your payment towards paying off the principal of your loans rather than just the interest - and hopefully, reduce your debts sooner than if you continued making the monthly payments on your credit card debts at higher interest rates.
It is wise not to mistake getting debt relief from a debt consolidation program with a debt consolidation loan as the two options are fundamentally distinct from each other. As noted earlier, debt consolidation typically involves combining your unsecured and credit card debts into a single, more affordable payment plan made to a credit counseling agency.
On the other hand, with a debt consolidation loan, you would typically combine your high-interest debts into one, lower interest loan. A debt consolidation loan involves taking unsecured debt and paying it off with funds that come by way of a "secured" loan, meaning, a loan where you would have typically put up your home or other asset to get approved.
In many cases, consumers who get approved for a debt consolidation loan generally end up using their credit cards again. As a result, many of these consumers will have to manage new, high-interest credit card debts to deal with on top of their loan. In these cases, a debt consolidation loan has generally made their debt situation go from bad to worse.
Explore your debt relief options. Request a free debt relief estimate and savings analysis - at no obligation to you.
Credit Card Debt Settlement
For many consumers, debt settlement is another viable debt relief option. Again, as previously noted, it is important to understand how it is different from debt consolidation through a credit counseling agency. With debt consolidation, you are paying all of your debts at typically lower interest rates. With debt settlement, you are hoping to settle or negotiate with creditors for significantly less.
A few words of caution, however, regarding debt settlement: As the term implies, credit card companies are certainly not legally required to "settle" or accept the settlement proposal. And, in many cases, consumers are also advised to stop making their credit card payments and accumulate funds over a period of time so they can make a reasonable settlement offer.
Therefore, creditors may threaten to sue those consumers for defaulting on the terms of their credit card agreements. As a result, consumers who stop making payments will typically see a decline in their credit scores.
Yet, for many consumers, debt settlement remains a popular alternative to bankruptcy - which can have a devastating and longer-lasting effect on your personal credit. The bottom line is, no matter how overburdened you are with credit card debts, there is help available - be it in the form of a debt management plan, debt consolidation loans, or debt settlement.
Request a free debt relief analysis and savings estimate. Start by answering a few, simple questions here.