By: Brian Anthony
With the economy in shambles and unemployment at near record levels, many people are struggling with an increasingly unbearable credit card debt. If you’re one of those people, you have several options that the credit card companies don’t want you to know about: debt consolidation and debt counseling.
Many times, these systems can reduce the overall debt you owe and lower your monthly payments to settle your credit card debt quicker. Instead of worrying about your next payment or struggling with your credit card debt, exploring one of these options may be worth your time.
Do I Qualify?
One of the greatest benefits of both debt consolidation and debt counseling is that there are no qualification requirements. This means that regardless of your income level, net worth or any other factors you can use these programs to settle your credit card debt.
Keep in mind that many of the companies that offer these programs prefer that you have a total debt amount of over $10,000. However, with the average American carrying a balance of over $12,000 on their credit cards, this requirement isn’t usually an obstacle.
What Is the Difference between Debt Counseling and Debt Consolidation?
Many articles and informational websites use these terms interchangeably, but the two are very different techniques used to settle your credit card debt. Here is a look at the basic differences:
Debt consolidation is the process of taking multiple outstanding debts and bundling them into one loan. The debts can be a combination of credit card debt, medical bills, retail credit cards and gas cards.
When these debts are merged, the top debt consolidation companies are usually able to reduce the overall principal owed to the creditor. This allows the consumer to have an overall lower balance to pay off.
In addition, the loan that all of the debts are merged into will almost always have a much lower interest percentage charged on the balance. This lower interest charge further reduces the monthly payment amount and helps the consumer erase the debt faster.
Debt counseling is a process where a professional debt expert advises the consumer on their debt and payment options. Many times these professional counselors can shed light on a person’s payment activity and find a way to use their money to more effectively pay off their debt.
Occasionally this means advising a client to transfer some unsecured debt to a home equity line or some other lower interest account.
Because debt counseling seldom reduces the overall balance owed, debt consolidation is usually the preferred way to settle your credit card debt.
How To Get Started
Before you start any program, you need to gather all of your statements for every credit card, bank card, gas card and medical bill you have. Total all of both the balances and monthly payments.
Once you have all of this information, a trained debt counselor can discuss the best options available to settle your credit card debt.
You may be surprised how much money you can save!