Posts Tagged ‘Payday Debt Help settlement’

Debt Consolidation Or Debt Settlement – Which Provides Better Payday Debt Help?

Payday debts when remain unpaid for a very long period of time prepare a hell for the borrower, getting out of which without serious financial bruises sound like an impossible task. Luckily, there are various types of payday debt help programs that you can qualify for and find out an affordable way to pay off all your debts without going through financial nightmares anymore. Two most

popular solutions include debt consolidation and debt settlement. There cannot be a one-line answer to which one out of these two is a better solution for the specific kind of debt situation you are in. In most cases, reputable debt help organizations offer a combination of both the programs to make things much easier and more affordable for you. Following are some basic facts about these two programs that will help you make an informed decision about the type of payday debt help that is the most suitable for you.

Where To Look For Payday Debt Help?

First things first, you should never get payday debt help from your payday lenders directly. Many lenders do offer consolidation services to their borrowers, but it is very important for you to keep in mind that such activities on part of payday lenders are illegal in the majority of the states in the United States of America. Therefore, you must always look for help from reputable debt consolidation companies, credit counseling agencies, even churches or other non-profit organizations.

What Happens When Your Payday Debts Are Consolidated?

When you sign up for a payday debt help program with a debt consolidation company, you have to sign a written contract with that company as well as with your payday lenders, where you agree that you will be making regular monthly payments (a fixed consolidated amount of money) to the consolidation company while that company will be making the respective payments to the lenders. As you can se,, the debt help company in this type of program works as a mediator between you and your lenders. The company becomes your representatives. As a result, all collection calls stop immediately while you get a chance to pay off your debts in easy monthly installments over a certain period of time. You do not even have to make multiple payments; you make a single payment to the consolidation company while they take care of the rest of things on your behalf. This way, the program takes away the stress from your life, allowing you to have a better focus on how you can improve your finances.

What Happens In Settlement Of Payday Debts?

When you sign up for a payday debt help program with a debt settlement company, you get a chance to get rid of all your payday debts by paying a much lower amount of money than the actual total outstanding due. When your payday lenders participate in such a program, they agree to write off a certain percentage of your debts that you owe to them. Depending upon the agreement among you, your lenders and the debt settlement company, you may be required either to pay off the agreed sum of money all at once or to pay it in a couple of monthly installments.

What Happens When Consolidation And Settlement Take Place In A Combined Way?

Many payday debt help companies prefer to use a combination of both the programs, which brings better results in favor of the debtors. In such cases, your lenders do not just write off a large part of your debts but they also allow you to pay off the remaining balance as part of a consolidated payment plan. These programs thus reduce your debt burden instantly to a great extent.

Effects On Credit Scores

In general, both these payday debt help programs are safe to use and can be very helpful as long as you sign up with a legitimate and reputable debt consolidation company. You can pay off your payday debts quite easily with the help of these programs, but it is still important for you to keep in mind that participation in such debt help plans can affect your credit score quite adversely. Therefore, to be on a much safer side, you are advised to talk to the debt help company in advance about the same. Many companies offer specific plans that make ensure protection for your credit score even while you participate in a payday debt help plan.

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What are the pros and cons of debt consolidation?