Credit Card Debt Consolidation Versus Debt Settlement - How To Pick The Best Option?

Credit Card Debt Consolidation Versus Debt Settlement - How To Pick The Best Option

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To cater the increasing amount of credit card defaulters, the US government has brought into prominence a set of debt relief options with several differences to suit all kind of debtors. Debt consolidation, Credit Counseling and Debt Settlement programs are a few of them. In this article, we intend to discuss about the major differences of credit card debt consolidation and debt clearance programs and how to decide the best option for your situation.

1. The pre requirements

To get qualified for a debt consolidation program, the consumers are expected to have two or three credit card liabilities. Under this program, they can combine two or more existing debts into one and make it a convenient method whereas in debt reduction the debtor is expected to have a minimum amount of $10 000 or more than that in debt. If you can fulfill those requirements, you can apply for any of these programs.

2. Suitable for-

To survive within a debt consolidation program; the consumer needs a regular income as he will not get discounts like in debt settlement programs. So the program is suited for those who have a fair income but cannot handle their expenses. The debt reduction programs are suited for those who cannot handle their minimum monthly payments. In reality, this program is for those who are on the verge of bankruptcy.

3. Advantages

Once you are enrolled in a debt consolidation program, the settlement company will discuss with your creditor and will combine your debt bills into one. Under this program, you will not receive discounts, but will be able to secure a lower interest. Paying one fixed interest and a fixed monthly payment, saves you a lot of money and help to be debt free within a short period of time. In debt clearance, usually you receive a 50% of discount and in some cases 70% depending on the amount of liabilities you owe and your ability to pay off them. The interest will be wiped off at the initial step.

However, both these options can be considered as better alternatives than filing a bankruptcy case.

Finding legitimate debt settlement companies is very important. Unfortunately there are predatory debt settlement companies on the market so consumers need to know how to find legitimate services. To locate the top performing debt settlement companies in your state check out the following link:

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