The Different Between Credit Consolidation and Debt Settlement
Credit Consolidation or Debt Settlement?
Executive Summary By Adam Jasa
Credit Consolidation is to combine outstanding debts into one or several loans. A Credit Consolidation can be a good move but only if the new loan is at a lower interest rate than the individual debt items. I recommend that if you get approved for a consolidation loan to only accept if the interest rate is substantially lower than the loans you are consolidating. Remember, only consolidate for a lower interest rate and take all closing costs into consideration.
Debt Settlement is also known as Debt Reduction. Debt Settlement is different than Credit Consolidation because the goal is to reduce your principal debt amount. This is done through negotiating with your creditor to lower your debt amount based off your specific financial hardship. Debt Settlement is usually the fastest way to get rid of unsecured debt besides bankruptcy.
If you have decent credit, your payment history will be negatively affected which is enough to pull your credit score down into the “poor” range. Once the debt is paid off you can begin to rebuild your credit.
Please read another resources about How to Consolidate Student Loans
[...] your payments and the amount of unsecured debt you’ve acquired is high, over $10,000, then debt settlement could very likely be your best option for debt relief. Good debt settlement programs will have you [...]
[...] 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, in most cases by up to 50% or more. 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. [...]