What’s the Difference Between Debt Consolidation, Debt Negotiation & Debt Elimination?
Debt consolidation is the process of grouping all monies owed into one lower payment. Lowering one’s monthly payment into an affordable amount can be very beneficial for debtors; however, many companies that offer this service charge exorbitant interest rates, causing the individual to pay much more money in the long run.
Debt negotiation is when the consumer’s lenders are contacted and asked to lower the total amount owed. Buyer beware, because many consumers have been taken advantage of by companies who offer this service. Many cases have been documented where the consumer’s debt negotiation company simply took the money and never contacted the lenders; causing the debtor to fall into even worse standing with their lenders.
Debt elimination offers are often schemes used to convince the consumer that their current lines of credit are in fact illegal agreements. A debt elimination company will often charge an upfront fee to supply a legal document to the lender which supposedly absolves the consumer of the monies owed. This service is basically a waste of time and money, as the documentation has no bearing on the debt owed.
Resources:
Intermex Power – BBB on Differences Between Debt Consolidation, Debt Negotiation, and Debt Elimination Plans
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