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Each program has different success rates that can sometimes achieve up to a 70% debt reduction.

”Debt relief” just like “debt elimination” are concepts that refer to a wide range of services. Most companies who advertise themselves as debt relief providers actually offer a debt consolidation service, a debt negotiation service, debt consolidation loans, debt settlements or a combination of two or more of them.

Should you want to hire their services, make sure to know beforehand what is exactly what they do. Otherwise you may be letting them to dispose of your finances and they may affect your credit score negatively providing little help to your debt problem.

 

Debt negotiation implies agreeing with the debtor’s creditors new repayment programs with debt reductions, interest rate reductions and extensions on the repayment schedules so as to ease the situation of the debtor by providing lower monthly payments he will be able to afford.

Debt negotiation can be done by an individual (even yourself) or a debt negotiation company. These companies have expert negotiators that can obtain the creditor commitment of showing the debt fully paid after negotiation so your credit report won’t be affected negatively. However, during the process your credit score may be affected.

Debt settlement has two possible meanings: It can refer, as debt negotiation, to the process of agreeing with creditors new repayment programs or it can imply some sort of legal settlement.

This means that if to some extent your debt problem has become a legal problem, a debt settlement company (usually a law firm or a company with expert lawyers) will be able to reach an agreement with the creditors and take your debt problem out of courts.

Debt consolidation agencies also negotiate with your creditors but generally have agreements made with credit card providers and loan lenders, so the process is a lot simpler. Once you contact a debt consolidation agency, just by seeing who you owe money to, they can tell you to what extent your debt can be reduced.

Usually, in order for the lenders and financial institutions to agree to debt reductions, they commit to take care of payments themselves. So, each month you’ll pay a lump sum to the debt consolidation agency and they’ll take care of the rest.

Sometimes, in order to provide you with this single monthly payment, you are approved for a debt consolidation loan with a lower interest rate than the average of your debt’s rates and a longer repayment schedule too.

This kind of loan can also be requested directly to some lenders but approval is easier if the lender knows for sure you’ll use it only to cancel debt and that can only be done through a debt consolidation company.