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Debt Relief Alternatives: Government Debt Consolidation or Debt Elimination?

Many consumers, willing to put an end to their debt problems, often get confused with difference between debt elimination and consolidation. Depending on your individual case, one or another may be an effective way to get out of debt sooner.

Recent economic crisis, besides slowing down economy also made Americans slow down on their payments, leading many to credit damages. More and more consumers are getting behind on their debt obligations because of layoffs and pay cuts. To prevent additional damages, government created and implemented a number of programs that are aimed to help American consumers to manage debt better. Some of them feature such extreme measures as debt relief through debt elimination and forgiveness. Government debt consolidation programs, little known to many, are already gaining popularity as an effective, and, sometimes, the only, way to get out of debt.

Debt Consolidation

The major idea behind government debt consolidation programs is to assist struggling individuals in converting their multiple debts to one, featuring lower interest rate and more affordable monthly payment. In simple words, instead of many debts to repay, you would only have one, resulting in lower payment. Depending on the amount of financial obligations, such programs allow for getting out of debt in as little, as two years, or even less.

Debt Elimination

Debt elimination, another feasible option for individuals with high level of debt, follows a very different procedure. Using the resources of debt settlement agencies, you may be able to negotiate the amount of your past due or about to become delinquent debts, lowering it by 20-50%. Typically, the amount of a discount depends on original debt amount, level of delinquency, and proposed repayment terms. Making debt elimination agreements though debt settlement agencies is a cost-effective way to pay off your debts. All of your debts may be settled for less, with one low monthly payment payable to debt settlement agency that then disburses your proceeds to multiple lenders.

While debt elimination is great, as it allows for greater money-saving opportunities, it does have a significant drawback it does hurt your credit score. Also, should you fail to fulfill your payment obligations with debt settlement agency, all of the previous arrangements may become null, making your lenders eligible to claim full amounts owed again. Therefore, debt consolidation is often more advisable than debt elimination.

Always Weight Your Decisions Carefully

Before making any decisions on which way to go, an assessment of your individual situation should be made. You need to weight all pros and cons of debt consolidation and debt elimination programs, before making a decision. In some cases, when damage is already made to your credit profile, you may be better off with debt elimination. In other cases, government debt consolidation program may be a better solution. No matter, which road you will choose to take, help is widely available.

Once the decision is made, it is time to look for an agency that would handle the process for you. Both, debt elimination and debt consolidation companies may easily be found online. It is important, however, to ensure that you will be dealing with a legitimate, professional organization that would handle all your debt problems. Therefore, do not spare time researching companies online, performing background checks with local consumer rights officesPsychology Articles, and reading customer reviews.

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Lara Sawyer is the author of this article. She works successfully as a financial advisor with years of expertise on Bad Credit Loans Guaranteed Approval. She publishes informative articles about Loans for People with No Credit, home loans, credit cards, auto loans, business loans and others at

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