Debt Settlement Vs Debt Consolidation - Which is Better For Your Financial Situation?

Debt Settlement Vs Debt Consolidation - Which is Better For Your Financial Situation

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When in debt you tend to search for ways out, the most common ones are bankruptcy, debt settlement and debt consolidation. Bankruptcy should not even count as a debt relief option due to the high costs that it implies and the lasting bad effect that it will have on your credit score, despite these things, people still use it mostly because they don't have information about other options. So, we are left with debt settlement and debt consolidation which both come as alternatives to bankruptcy and both are used to clear your loans. But which one is better?

Financial consolidation can negotiate with the creditors and obtain lower interest rates and fees, this result in smaller monthly payments and so the debt can become affordable for some consumers. Also debt consolidation can be used when you have taken loans from several creditors and are now having problems with the multiple payments each month. By using debt consolidation you unite your loans and just make a simple monthly payment to the debt consolidation company, they will then take the money and send them to all of your creditors.

Debt settlement uses the same basic idea, negotiation, but the goal is first to obtain a small amount of loans; this can reach a 60% reduction in debt in some cases. After this happens you will get help in paying back the rest. The settlement company will take care of every aspect, they will even open a settlement account in which you can deposit money for a few years until you have the needed totals. You choose how much to deposit each month but it is best to clear your debt as fast as possible and not end up in debt again.

Both options are used to clear unsecured loans. Financial settlement has the requirement to have debt of over 10 000 dollars, this makes debt consolidation the best option to release debt of under 5 digits. But once you are in deep debt, the best option for you is surely a settlement due to the fact that it will simply cut off half of what you owe.

Debt settlement is a viable alternative to filing bankruptcy. Most consumers are able to eliminate at least 60% of their unsecured debt while avoiding many of the negative consequences with filing bankruptcy. If you are over $10k in unsecured debt you will be eligible for debt settlement. To locate legitimate debt settlement companies in your state check out the following link:

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