Difference between Debt Consolidation, Debt Validation and Debt Settlement
In order to preserve your credit score, make sure you study all the debt settlement ways to get rid of your piling debts. This is mandatory because each option has a different result on your credit score. Many firms claim to get rid of your debts in a simple manner but how many have the credibility and guarantee of a good result. To understand how to get rid of your debts, it is important to understand the following three things in this area.
Debt consolidation is all about combining your debts in one single loan in order to lower the monthly payments and charges that one has to pay. It is one of the best ways for debt control. There are many creditors who offer specially designed debt consolidation loans with very low interest rates in order to spread the entire debt over a period of several years. This helps the individual to pay them off slowly and mitigate the monthly burden. Many credit and debit card issuers offer this method to their users enabling you to transfer existing balances on different cards with very low or zero interest introductory period.
Debt settlement helps you to get rid of all your previous debts at one time and is offered at nominal prices by firms like New City Financial. It is usually a last resort opted by people because it causes a big drop in your credit score and could also be a hurdle in future endeavors when a loan will be required. There is also an option of filing for bankruptcy and starting over a new leaf but bankruptcy is a huge black mark in the financial industry. You can make an arrangement with the lender where you pay less or same as the amount owed and get rid of all the previous debts.
Debt validation is all about challenging the debt from the debt collector. According to the FDCPA, anyone has the right to discord the debt and get validation as a part of their consumer rights.