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Choosing Between Bill Consolidation and Bill Settlements

There are various differences between bill consolidation and bill settlements that one should know about before applying for either one. Depending on individual situations, one would serve a better purpose than the other. For someone who has difficulty paying their bills, one of these two could be of great help.
Bill consolidation is the process by which all of a family’s or individual’s smaller bills are combined into one larger bill. Depending on the financial institute that provides the service, there may be a reduced interest rate as well as a lengthened payment term. Bill consolidation is for those who can still afford to pay some of the bills but are struggling financially and need their monthly payments lowered.

Bill settlement is when the persons in question need immediate assistance and cannot pay all of their bills even if the monthly payments were lowered. This process is generally for those that are in extreme financial difficulty than cannot manage their bills at all. This process includes writing up various proposals and filling out applications for various creditors. There are negotiations to attend and a lawyer may be needed to complete the process.

Bill consolidation does not need the guidance of a lawyer. There are bill consolidation agencies and various other financial agencies that undertake these proceedings for the individuals involved. They make the agreements with the companies that the clients are indebted to and created contracts with them concerning lower payments. These agents are the people who do all the work, and they don’t have the same type of fees as lawyers would have.

In fact, if one is looking at bill consolidation through a bank, the staff will generally not have these fees at all because they already earn a salary. Of course instead, there will be a small interest on the payments that are made to the bank but in the long run. It is still better financially using this route of bill consolidation then driving oneself into debt even further.

Debt settlement usually doesn’t take so much time to complete as does bill consolidation. Because a settlement is usually done through a lawyer, they prefer to finish their cases, so they can start a new one. Also, since the settlement consists of the lowering of the whole debt, it may not take as much effort on the consultant’s part. However, in bill consolidation, although the whole process is slightly easier for the client, it does take more time as the agent has to communicate with each one, enter separate negotiations and gather it all together and make it as a payment towards their own institute before they forward it to each of the companies involved.

Neither bill consolidation nor debt settlement is something that should be done without counseling or financial advice. Both of these are quite detailed procedures and involve a lot of paperwork. Before choosing either route, do your research and ask many questions to find out which option is the best one for you to take.

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