Home > Credit Advice > Debt Settlement FAQ Part 1

Debt settlement clears way for financial freedom, rather than using debt consolidation

When looking a ways to solve a financial mess, people typically look at two solutions: debt settlement and debt consolidation. The two paths are different ways to begin your journey back to credit-worthiness. Here are some frequently asked questions that will hopefully allow you to make an informed decision about debt settlement versus debt consolidation. These FAQs were provided by iDebtHelp, a debt settlement company.

Debt settlement is better path than debt consolidation to achieving financial freedom

Q. What is the Debt Melt Down Program?

A. The Debt Melt Down Program is an aggressive method of helping consumers out of the debt trap and away from the bankruptcy path. The client makes a single monthly payment each month into their own personal bank account. As funds accumulate in the client's account, the iDebtHelp processing team negotiates debt settlements with the client's creditors, often enabling clients to escape debt at a fraction of the total amount they owe. Once a settlement is reached by iDebtHelp, the client then pays the settlement to the creditor from their own account. On average, iDebtHelp's clients in the Debt Melt Down Program end up spending 60 cents for every dollar that is owed.

Q. What type of debt can be handled through the debt settlement program?

A. The debt settlement program can accommodate almost any kind of unsecured debt. Unsecured debt is debt not collateralized by property. Debt such as car loans, mortgages, IRS tax liens, government backed student loans, etc. are examples of secured debts that cannot be included in the debt settlement program. 

Q. Who qualifies for the debt settlement program?

A. Our Financial Counselors do a detailed financial analysis to determine if an individual would benefit from the debt settlement program. Our main focus is to make sure that the program is a realistic solution to the individual's particular situation. 

Q. How does it affect credit?

A. While on the debt settlement program, the client's credit will in all likelihood suffer damage that occurs when accounts are not being paid. Of course, if the client is presently late or delinquent the difference may be minimal. However, once the client is debt free the accounts will indicate a paid or settled status. Within six to 12 months, our average client will be on their way to total recovery. 

Q. How does this debt settlement program compare to consumer credit counseling?

A. Credit counseling has no effect on debt principal at all. The purpose is to pay the debt in full at a reduced interest rate. The big problem with consumer credit counseling is that the monthly payments are often still too high and it will often take five or six years to pay the debt off. Also, keep in mind that these firms were established and now often funded by the creditors themselves. 

Q. How does this debt settlement program compare to bankruptcy?

A. Bankruptcy is an extreme option designed to be the last straw. It has a serious lingering affect on credit and can often have negative ramifications in many aspects of everyday life.

MORE DEBT SETTLEMENT QUESTIONS? 

SEE PART 2...

Need Credit Help Today?

Visit our Credit Help Page to find a list of the best in Credit Help suppliers.