The title of the Video is
The Growing Revenue of Collection Agencies

Debt Settlement Companies continue to be targeted as a problem industry, a scam, or a fraud. They are easy targets in these tumultuous times, and for good reason. Many of these “Debt Settlement Companies” “Sell” Their service without full disclosure about the risks involved and many of them don’t educate their clients about all of their options, including Debt Consolidation, Debt Management, Credit Counseling, and Bankruptcy.

The rise of the Debt Settlement industry is a result of other underlying issues including but not limited to, credit card companies, Lobbyist’s, bad Laws, lack of government regulation, and most importantly our CULTURE.

Clark Howard recently said “…when the bankruptcy laws changed in our nation. At that time, the giant banks that control the credit card portfolios stopped being cooperative with affiliates of the National Foundation for Credit Counseling (NFCC), which helps consumers manage and eliminate their debt. The banks were cynically trying to force people into a position where they had no choice other than to pay up. That environment created an opportunity for the debt-settlement firms to pop up with their false promises that they alone knew how to defeat the banks.”

We live in a capitalist economic system. The rise of Debt Settlement is directly related to the dire need for change in our Culture and specifically changes to the Credit Card Industry. Until Credit Card Companies are brought back into check the need for Consumer Debt Relief companies will always be there.

Debt Settlement

Debt settlement, also known as debt arbitration or debt negotiation, is an approach to debt reduction in which the debtor and creditor agree on a reduced balance that will be regarded as payment in full.

As long as consumers continue to make minimum monthly payments, creditors will not negotiate a reduced balance. However, when payments stop, balances continue to grow because of late fees and ongoing interest.

Consumers can arrange their own settlements by using advice found on web sites, hire a lawyer to act for them, or use debt settlement companies. Some settlement companies may charge a large fee up front; or take a monthly fee from customer bank accounts for their service, possibly reducing the incentive to settle with creditors quickly. One expert advises consumers to look for companies that charge only after a settlement is made, and charge about 20 percent of the amount by which the outstanding balance is reduced.

Debt Consolidation

Debt consolidation entails taking out one loan to pay off many others. This is often done to secure a lower interest rate, secure a fixed interest rate or for the convenience of servicing only one loan.

Debt consolidation can simply be from a number of unsecured loans into another unsecured loan, but more often it involves a secured loan against an asset that serves as collateral, most commonly a house. In this case, a mortgage is secured against the house. The collateralization of the loan allows a lower interest rate than without it, because by collateralizing, the asset owner agrees to allow the forced sale (foreclosure) of the asset to pay back the loan. The risk to the lender is reduced so the interest rate offered is lower.

Credit Counseling

Credit counseling (known in the United Kingdom as debt counseling) is a process offering education to consumers about how to avoid incurring debts that cannot be repaid. This process is actually more debt counseling than a function of credit education.

Credit counseling often involves negotiating with creditors to establish a debt management plan (DMP) for a consumer. A DMP may help the debtor repay his or her debt by working out a repayment plan with the creditor. DMPs, set up by credit counselors, usually offer reduced payments, fees and interest rates to the client. Credit counselors refer to the terms dictated by the creditors to determine payments or interest reductions offered to consumers in a debt management plan.

Source:

http://en.wikipedia.org/wiki/Debt_settlement

http://en.wikipedia.org/wiki/Debt_consolidation

http://en.wikipedia.org/wiki/Debt_counselling

http://edition.cnn.com/2009/LIVING/personal/06/04/clark.howard.debt.settlement/

If you are in too much debt, remember that debt consolidation is an option. Financial dues and notices may be very stressful for you, especially if you have a lot of them. Dealing with credit collectors may be very strenuous especially if you do not have the money on hand to repay your debt. Well, it is good to explore debt consolidation as an option. But before actually getting a debt consolidation loan, it is important to know if it will be beneficial for you.

When you consolidate your debt, this means that you get a single loan to repay all your current loans. It could be that your entire unsecured loans will be consolidated to a single unsecured loan or you can get a single secured loan to pay off all your unsecured loans. Secured loans require collateral to acquire the loan. The collateral comes in the form of house, car or land. Sometimes, jewelries and other valuable materials are also considered as collateral. Because of the presence of a security deposit, the secured loan is actually a low-risk loan for the part of the creditor. In case the debtor does not repay the amount borrowed on the stated maturity date then the creditor gets the asset which served as the collateral. He can then keep the collateral for himself or sell it to get back the money he lent to the borrower.

In effect, he is willing to peg lower interest rates and gives way to better payment schemes. Unsecured loans have higher interest rates than secured loans. This is because the creditor faces a higher risk when lending money in an unsecured loan. Unsecured loans such as credit card, shop cards and the like do not require collateral or security deposit.

One benefit of debt consolidation is the low interest rates. If you are a good and patient researcher, then you might find a debt consolidation loan that has interest rate that is seventy five percent lower than the interest rates offered by credit card companies or other unsecured loans. When you get a debt consolidation loan, remember that you must agree on a monthly payment which you will be able to repay.

If you could not pay the monthly obligation, then your debt consolidation will be useless. A debt consolidation calculator is used to compute for the amount that you can borrow as well as the monthly payment. Flexible payment schemes are also offered by debt consolidation companies. There are also companies which offer benefits if you pay twice or thrice the monthly amount in one payment.