Debt Consolidation Vs. Debt Settlement – Understanding What Option Is Best For You

Debt consolidation versus debt settlement; which is the better choice for you

? Well it depends a lot on your present circumstances. This article will explore both options and after reading it I hope your choice will be clearer. One thing is certain though, having a huge debt burden can be overwhelming. I am here to show you how to make things better so let's get right into it.

Debt Settlement Advantages

When you arrange a debt settlement with your creditor, the agreement is for you to settle your debt in part. Simply put, if you owed $1000 a settlement agreement would you see you only repaying say $600.

The biggest advantage here is that you simply owe less and would have more money to spend. Perhaps service other more pressing debts such as mortgages etc.

Debt Settlement Disadvantages

Naturally with anything there is going to be a downside. In the lending industry, debt settlement is frowned upon and so you'll find that you may be penalized with a lower credit score. Basically your credit worthiness will suffer and whilst this is the case access to better more advantageous forms of borrowing will be unavailable to you.

Debt Consolidation Advantages

Consolidation involves pooling all your current debt obligations under one repayment structure. This is usually handled by a debt consolidation company, who specialize in helping people who find themselves overwhelmed by debt.

The biggest advantage is that you only pay one company so the hassle of making multiple payments to different lenders is eradicated. Debt consolidation is often easier to access than debt settlement. All that is needed is to find a company online and fill in a form as opposed to having to directly speak with creditors in the case of debt settlement arrangements.

Debt Consolidation Disadvantages

The biggest problem with debt consolidation is the cost. Due to the fact that the debt consolidation company effectively takes over all your current loan repayments, they usually charge a high interest on what you repay through them. This can often lead to a lengthier repayment period even though; your monthly repayment total is reduced.

Debt Consolidation versus Debt Settlement - Which One Should You Choose?

Your circumstances will determine the better option for you but I have a bias. You see although debt settlement allows me to wipe out a larger part of my debt it penalizes me for it and so I have always gone the consolidation route. Sure it may be costlier in terms of repayments, but in the long run my credit rating doesn't suffer as much. And this is priceless.

Plus finding a debt consolidation company just involves an online search and filling in a form. It's easier and more convenient. I hope you can now make a clearer between the two options and I wish you all the best.

Final Note: Believe it or not, you can legally eliminate 50% or more of your debt with debt settlement. However, the process can be overwhelming and frustrating. Having a specialist on your side can greatly reduce the stress, as they do all the negotiating and paperwork on your behalf. I highly recommend that you first start off with afree debt evaluation in order determine the best course of action based on your financial situation.

Debt Consolidation Vs. Debt Settlement Understanding What Option Is Best For You

By: alvin stump

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