February 14, 2012

Are Debt Consolidation and Debt Workout The Same Thing?

People often confuse the term “debt consolidation” with “debt settlement,” thinking that they are the same.  Unfortunately for those that learn the hard way, debt consolidation is nothing like debt settlement.  In debt consolidation, you add up all the bills you owe, combine them into one big super bill and chip away at that huge debt a little at a time.  By comparison, debt settlement is a process where you negotiate a large reduction in the amount of debt that you owe, and then pay on the reduced amount, thereby shaving years off of the time you are in debt and saving you thousands of dollars.  This article explores the “Pros and Cons of Debt Consolidation,” however, many of the “pros” listed in the article are not “pros” at all.   https://www.prlog.org/11790785-pros-and-cons-of-debt-consolidation-revealed.html

For example, a “pro” is that the debt can be paid over a longer period of time.  Now, why on earth would anyone want to pay on their debt for a longer period of time?  That just means you will be in debt for a longer period of time.  Another “pro” this article lists is that having one huge super bill instead of many can “decrease tension.”  Personally, I would not want to see a huge bill each month, knowing that I am obligated to this debt for the next 15 years of my life!  That does not decrease any tension for me.  The only way to decrease tension is to meet with a debt settlement attorney, have that attorney negotiate a large reduction in the amount of debt owed, and put together a payment plan that will have the debt paid off quickly.  Now that’s a plan!