The Inside Secrets Of Debt Elimination Services Revealed
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We'll explain exactly how these companies operate, explain how much they cost, and then help you decide if you should consider using one of these debt elimination services to help you with your debt situation.
Fair enough? Alright.
When it comes to debt elimination services (also called debt management, debt consolidation, bill consolidation, debt counseling etc.) there are basically two types of service. Debt consolidation and debt negotiation or settlement. The two are quiet different so let's take a look.
The two basic types of debt elimination services:
#1 Debt Consolidation Services:
Debt consolidation services do not not actually consolidate your debts, but rather they consolidate your debt payments. With this type of debt consolidation program you make just one payment to the debt consolidation company each month who then in turn pays each of your creditors on your behalf. But they do much more than this.
The first thing that a good non-profit debt consolidation company will do for you is to contact all of your creditors and negotiate lower interest charges on your accounts. A good debt counselor can often reduce your interest charges by 50% and sometimes even 100%.
**(For example, one company that we often recommend to our visitors routinely negotiates 0% interest charges with Bank of America, leaving only the principal portion of the debt to be paid back. This alone can save you $1000's of dollars in interest alone.)
You would be applying all of your payments to paying down the debt, not the interest. This in itself will dramatically reduce the time it will take you to pay off your debt.
Another one of the debt elimination services that these types of companies offer is negotiating with your creditors to lower the monthly payments to an amount that you can manage on a monthly basis. This will help you avoid late fees etc. and help you meet your monthly obligations without falling behind.
So what will it cost you? Well the beauty of it all is that your creditors subsidize much, if not all of the cost of these programs.
Let me explain.
You see, most of these debt elimination services (debt counselors) are non-profit organizations, therefore allowing your creditors to recoup most of the lost interest charges through tax write offs. This is one of the few areas where corporate tax laws actually benefit the "little guy".
Once you are on a debt consolidation program you will start to not only eliminate your debt, but also build your credit rating back up by making regular payments. It's a win win situation for all involved. By agreeing to reduce the interest charges on the debt, your creditors are trying to ensure that they at least get back the principal of the loan.
So I strongly urge you to take advantage of these debt elimination services. They are there to help you take advantage of the rights that you have.
#2 Debt Negotiation Services:
Debt negotiation is a more aggressive strategy when it comes to debt elimination services.
While debt consolidation as discussed above does not reduce the amount of the principal of the debt (just the interest owed and monthly payment amounts) debt negotiation is aimed at eliminating not only the interest, late charges etc. but also eliminating a large portion of the actual debt owed.
Warning: We do not recommend that you try this strategy on your own. Seek professional help if you are considering this option.
We recommend that you start by getting the free report "The Shocking Secrets Of How And When To Use Debt Negotiation", written by one of the industries top debt reduction professionals.
Important Note: The email subscription form for this report opens in a popup window. If you are using popup blocking software, please click here.
So how exactly does debt negotiation work you ask? Here's how...
Basically you stop making any payments to your creditors, and instead make monthly payments into a account that you control. In the meantime you (or a hired professional which we recommend highly) will negotiate with your creditors on a lump sum amount that you will pay them to eliminate the debt once and for all.
Highly regarded debt elimination services can often negotiate reductions in debt of 50% or more. In some cases as high as 89%! For example, if you owed a creditor $10,000, you would negotiate a one time payout of $1,100 and the debt would be eliminated.
Sound to good to be true? Click here to see an actual debt settlement letters in which the creditor "forgives" between 60% and 89% of the outstanding debt.
So how much will this type of service cost you?
Most professionals in this type of debt elimination services field will work on a commission basis, say 25% of the overall savings. In our example above, if they negotiate a $8,900 reduction, their fee would be $2,250 (25% of $8,900) The more they save you, the more they make.
Do these type of debt elimination services sound to good to be true? Well keep this in mind.
When you stop paying your creditors altogether your credit rating will be about as bad as it can get. However, if your credit rating is already bad and you are facing bankruptcy this could be a good option.
The best way to determine what type of debt elimination plan is right for you is to have a professional debt elimination specialist review your situation. Click here now to receive a FREE, no-obligation, custom debt reduction plan personalized just for you.
The second obstacle is coming up with the money to pay off the debt in one lump sum. In theory when you stop paying your debts you start to make payments into an account that can be used down the road to make the lump sum payment. This may take a while depending on your situation.
Another option would be to take out a home equity loan if you own your own home or borrow from a relative etc.
Again, it would be wise to employ a professional to help you first of all decide if these types of debt elimination services are right for you and then help guide you through the process.
The debt elimination service that we most often recommend to our visitors is, in our opinion one of the best and most trustworthy debt relief companies in the market. If you would like to receive a Free, no-obligation custom debt reduction plan from them then simply click here.
Good Luck.
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