Debt Settlement vs. Quick Loans
How much do you know about debt settlement? Do you know how it effects your credit? Were you aware that it shows up on your credit? If you are to a point where you could care less about your credit and you were considering bankruptcy either way then debt settlement, or debt consolidation may be the best solution for you.
Bankruptcy:
New laws have made it much harder to declare bankruptcy. Bankruptcy can damage your credit and take almost 10 years to clear off your report.
Debt Settlement:
This is where you come to an agreement to pay only part of the loan. This technique is sometimes used in debt consolidation. Settling a debt with a lender will most likely show up on your credit report, showing the exact amount of the loan you did pay and the exact amount you did not. You may no longer have additional late payments, but the amount of the money you borrowed and did not repay will show as going into default on your debt. Simply put it will show that you didn’t pay off your debt, affecting your credit.
Debt Consolidation:
Sometimes a consolidation is simply what is sounds like. Paying off all loans, and putting them into one loan with one interest rate. However some times the consolidation company works with your lenders and does a form of debt settlement lowering the total amount you owe. That makes the total amount you didn’t end up paying possibly show up on your credit report negatively.
Some will tell you to forget your credit score, and get out of debt any way you can. You’ll be hating those guys 10 years down the road when your making great money but still can’t qualify for a home because of credit problems.
Other Solutions to Consider
Quick Loan
Sometimes it may be necessary to get a small quick loan to keep yourself current with your bills. These loans are generally for a very short period of time, such as until your next pay check. If you use them this way they can be very helpful, but don’t get into trouble with getting a bigger loan than you can handle.
Reduce Your Interest Rates
If you have credit card debt call the credit card companies yourself and ask if you qualify for a lower rate. If you have managed to stay up on your payments you may very well qualify for a rate reduction. Pay attention to anything you receive in regards to your credit cards agreement. Often they will send out updates that include a raise in interest rates. You are in a contract and can usually choose to opt out of changes to your agreement.
Consolidate Your Budget Not Your Loan:
Before rushing out to get a quick loan or debt consolidation, look over income and expenses and see where you could possibly put more money towards your debt. We all waste money, and a lot of us do it simply because we aren’t watching what we’re doing. So take a closer look at your budget and see if there are things you could be doing better.
Time is Money:
If you’re not working money is just money and the less you spend the better. When you are working think about how much your time is worth.
For example, if I’m going to on a trip some where I might make more if I fly because then I can work 2 extra days. If I make more then the cost of flying in those two days then flying is better, also consider the cost of gas you will spend in addition to two days not working. Apply this principle when spending money.
It’s really good to know all of your different options before you make any rash decisions about your finances. Try a quick loan if you need to get through the next few weeks before rushing into bankruptcy or calling a debt consolidation company. You’ll be glad you made the right choice.