Debt-payment terms
By Bankrate.com
A look at some debt-payment
terms and what they mean:
Credit-counseling agency:
Most credit-counseling agencies are nonprofits that get much
of their financial support from the credit card industry. They offer
an array of services, including debt-management plans. Some do debt
negotiation for clients on a case-by-case basis. Credit-counseling
agencies get their operating money by receiving a percentage of
each client's payments back from creditors.
Debt-management plan:
When you enroll in a debt-management program,
you write a monthly check to the credit-counseling agency and the
agency pays your creditors. In a typical debt-management program,
a card issuer will charge lower interest rates, stop charging late
fees and contribute money to the credit-counseling agency. A debt-management
plan usually lasts three to four years.
Debt consolidation: With
debt consolidation, you replace credit card bills and other debts
with a single loan, often with a lower monthly payment and a longer
repayment period.
Debt negotiation:
Debt negotiators promise to cut credit card bills by negotiating
lower payoff amounts from creditors. Often, a debt-negotiating company
will tell you to stop making payments to creditors and to send money
to them instead. The money gets placed in an account until the debt
negotiator decides to make an offer to a credit card company.
Credit repair:
Many credit-repair companies promise to remove negative information
from a consumer's credit report for a fee. Negative but accurate
credit information cannot be wiped off your credit record. Everything
a credit-repair company can do to clean your credit, such as correcting
mistakes and disputing outdated information, you can do on your
own for free or a small fee.
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