Using A Debt Settlement Loan...

To Cut Your Debts And Payments By 75%

How much can you save by using a debt settlement loan in order to reduce your debts?

  • 50% is a conservative estimate
  • and up to 75% is definitely achievable

Can you do better? Absolutely, but your results will depend upon how well you (or the debt settlement company representing you) handle the negotiations. And if you do hire a debt settlement/negotiation company or attorney, you should keep in mind that the typical fee that they charge is around 15% of you total debt. Having to pay this fee will, of course, reduce the amount that you actual save.

How Does A Debt Settlement Loan Work?

You are probably familiar with the concept of a debt consolidation loan, but may not be as familiar with the concept of a loan to settle your debts. Here are the differences...

Debt Consolidation Loans

People looking for a debt solution will often turn first to a debt consolidation loan thinking that this is the best way to get out of debt. For some reason (likely due to lack of information) most people perceive these types of debt loans as their best option, when in most cases they are not. Here's a breakdown of how consolidation loans work.

  • you borrow money to pay off your current debts
  • your current debts must be paid off in full
  • the interest rate on the new debt is lower than the debt you paid off thus saving you money on interest charges
  • consolidation loans are often structured with terms that allow you to lower your monthly debt payments
  • if your current debts are credit card debts, you can keep those cards but expose yourself to abusing them in the future
  • debt/credit consolidation loans can be either secured or unsecured
A Debt Settlement Loan

A loan to settle your debts is a bit of a different animal than the consolidation loans we discussed above. Here's how they work.

  • you borrow money to pay off your current debts
  • unlike debt consolidation loans, you only have to pay 25% to 50% of the value of your outstanding debts. This is due to the fact that prior to paying off your debts you negotiate deep discounts with your creditors in return for a one time lump sum payment.
  • the interest rate on the new debt is not necessarily lower than your current debts
  • since the amount of debt is actually reduced by 50% to 75%, your monthly payments will be reduced considerably
  • if your current debts are credit card debts, you will have to close your accounts once they are settled
  • a debt settlement loan can be either secured or unsecured

The Main Difference Between These Two Types Of Debt Loans?

As you can see, the main difference between these two types of debt loans is the amount that must be borrowed to pay off your existing debts. With a settlement loan you must first negotiate with your creditors to accept a discount on the amount owed. However, this is not the case with regular consolidation loans which only transfer your debt from one creditor to another without actually reducing the amount owed.