Debt Settlement Vs. Consolidation

DEBT SETTLEMENT VS CONSOLIDATION Debt settlement and debt consolidation are debt-reduction strategies CREDIT CARD #234 4567 7899 1234 DEBT %24 DEBT SETTLEMENT CONSOLIDATION usually reduces the total amount you owe combines all of your debts into one monthly payment How Does Debt How Does Debt Settlement Work? Consolidation Work? PAST DUE PAST DUE 1307 9113 O592 2711 DEBT DEBT DEBT Usually only available for delinquent accounts with several months of missed payments. Good for people with lots of different unsecured debt. BILL Combines multiple unsecured debts into one monthly payment. Debtors need to show an inability to pay the original amount. Consolidation can involve a TAX Certain debt savings from debsettlement Debt Management Plan (DMP) are taxable. RM The debtor consults with an HIN experienced credit counselor. The counselor gives actionable advice to control expenses. STEP-BY-STEP A debtor negotiates with creditors to try and reduce the total amount owed. The debtor, credit counselor, and creditors create an agreement for debt repayment. Successful negotiations result in a lower payoff The debtor pays one combined monthly payment to the counseling agency. amount. The new amount is documented in writing. The agency allocates funds from the monthly payment to individual creditors. The debtor sends a monthly payment to an escrow Credit accounts are closed, which can hurt credit scores. account. Once the account has enough money, the debtor usually pays it off in one lump sum A DMP appears on credit reports but does not hurt credit scores. Or a Debt Consolidation Loan (DCL) Why do creditors agree to a lower payoff amount? The debtor takes out a new loan. The new credit account often has lower interest There's a lower chance they'll get the money back the longer a debt is unpaid. rates or payment amounts. Funds from the DCL are used to pay off all existing unsecured debt. DEBT A DCL allows a debtor to focus on one streamlined monthly payment with one creditor. Creditors can cut their losses by offering a lower payment amount. ТАХ Settlement helps lower the risk of a debtor filing bankruptcy and having debt discharged. Consolidation loans aren't taxable. WHICH ONE IS RIGHT FOR YOU? Debt settlement could be a Debt consolidation could be good fit if you are financially unable to pay back debts. best if you want to simplify multiple payments. United Settlement IT CARD 1234 4567 7899 1234