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How does a debt consolidation settlement service work?

April 26, 2017debt consolidation service

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How does a debt consolidation settlement service work?

2 Answers

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jenniferrudolph85 jenniferrudolph85 Posted

One of the harshest realities of life nowadays if the existence and persistence of debt. No matter how hard we try, we just can not seem to escape it. High employment levels and the increasing cost of living have managed most individuals in a vicious cycle of debt. The average American family spends thousands of dollars trying to ward off foreclosure and bankruptcy. Even everyday items of use cost much more than they used to just a couple of years ago. Many people use their credit cards to buy things when their paychecks do not really stretch that far, and before they know it, they are knee-deep in debt. The current recessionary too has made matters tougher for those who are already battling a mountain of debt.

However, there are a number of debt consolidation services that offer a ray of hope to debt-weary individuals. These firms offer a number of services like credit card debt consolidation, unsecured debt consolidation, federal loan consolidation, and many more. In actual terms, debt consolidation bunches together all your outstanding multiple loans and enables you to make just one monthly payment. The firm that you hire can also negotiate with your creditors for lower rates of interest and manageable monthly installments. Thus, debt consolidation loans enable you to get rid of debt quickly and are also easy on the pocket.

Those firms that negotiate debt consolidation loans will let you make a monthly payment you are comfortable with. While preparing the payment plan, these professionals also take your current and future salary into consideration. The biggest advantage of opting for free debt consolidation is that your credit scores will improve dramatically once you start paying off your outstanding dues. Unsecured Debt consolidation loans are the ideal solution to get out of debt quickly.

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A debt consolidation settlement service operates in two ways. First, they negotiate with your creditors to reduce the total balance owed on your debts by 40-60%. This means your creditors agree to be paid less than they are actually owed in order to settle the debt. Second, as part of the settlement, the creditors also reduce the interest rate on the remaining balance and the service sets up a payment schedule for the new balance.