Debt reduction is hard work yet it can be achieved with a sound plan and persistence. Learn some proven common sense ways of getting out of debt.
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The Basic Elements of a Debt Consolidation Program

By Consolacion S Miravite

Debt Consolidation and Debt Relief

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With so many companies touting debt relief options these days,it is easy to see why consumers become more confuse when seeking debt relief. Before you obtain a debt consolidation loan or enroll in one, you should be able to answer the following questions:

What is debt consolidation?

How do debt consolidation loans work?

Debt management versus Debt settlement

Is the debt consolidation company fraudulent?

A debt consolidation plan is the most common form of repackaging a loan. In this scenario, consumers obtains a new loan to pay off previous obligations, such as credit cards and medical bills. Ideally, the new loan should have affordable monthly payments, with lower bank interest rates than previous loans. In recent years however, banks have tightened their lending policies and debt consolidated loans have become more difficult to obtain. Most often, borrowers are required to have excellent credit ratings and/or provide collateral – real estate and vehicle, in order to qualify. However, one issue that is not addressed by this type of loan is consumer behavior. If the new loan package is used to pay off past obligations, and the consumer remains steadfast in his spending habits; he may end up with more debt piled up in his sleeves, than what he had initially started with.

Instead of obtaining a new loan, many consumers opt instead enroll with one of the many debt consolidation companies that provides debt relief. Most of the debt programs under this options, falls into two categories: debt settlement or debt management. There are differences between these two choices; and consumers should be made aware of what these are:

– With debt management, the company comes up with a fixed monthly payment by the consumer; and disburse these payments to the consumer’s creditors every month. The creditors in turn, agree to reduce the interest charges on the loan; but will also require closure of the consumer’s credit line. This scenario may have adverse impact on a consumer’s credit rating. Additionally, these plans still require the consumer to pay in full their loan balance plus interest and other charges, for a period that can last till five (5) years or more..

– Debt settlement is another option that can be availed of by the consumer. With this option, reduction of what is owed pertains not only to interest rate and other charges, but the principal amount, as well. This arrangement would also allow a consumer to pay his debt faster as compared to either debt consolidation or debt management options. One drawback however, is its negative impact on the consumer’s credit rating, and possible implications on the tax and legal angles.


Once you have gotten a firm grasp of the options that are available for debt relief, it would be necessary to do research of the company that you plan to do business with. The Internet is one source for you to do research in, to avoid the pitfalls of dealing with fraudulent agencies. For instance, if you search for Debt Consolidation San Diego online, you will come across our company, Athena Consultants. Our company has been in business for about ten years now, and has the track record for quality service as evidenced by the citation given by the Better Business Bureau. We offer free, no obligation consultation to prospective clients. We are happy to answer all queries and do preliminary reviews of all consolidation debt options that may available to you.

Consolacion S. Miravite is a Certified Public Accountant by profession. She dabbles in free-lance writing and blogging in her spare time. Her other interests include: real estate brokerage, farming, photography, and small business. She is at present with the academe as professor in the College of Accountancy. She has written about 300 articles in various niches in the past one year.

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