Which Method Should You Use Debt Consolidation Or Settlement?
There is disagreement as to which method of debt eliminations is better
, there are those that espouse debt consolidation while others debt settlement. It seems that debt settlement has the upper hand for now.
What are debt consolidation programs?
Debt Consolidations is essentially getting a new loan to pay existing creditors. There you combine various loans, which makes it simpler to manage since one loan and one payment result.
You are charged interest on it and at times even to your previous creditors. Your principle amount remains the same, so you still owe the same amount. If its done properly, your interest and payments may drop giving you the chance to pay off the loan faster.
However, you don"t get to experience a debtfree life for a considerable amount of time.
This is why many people favor debt settlement instead of debt consolidation.
What is debt settlement?
Debt settlement involves a negotiation with your creditors to reduce the amount you owe anywhere from 25 to 70 percent. Debt settlement is your life vest if you are sinking towards bankruptcy. At this point your credit standing and credit score have already been impacted since you most likely have missed or been late on payments. Getting your debt to income ratio lowered with the help of a professional debt settlement company is most likely your best option
After you have settled your debts you may begin restore credit.. Although it will take time to restore your credit and standing. This allows you to avoid declaring bankruptcy which should be your last choice.
Bankruptcy accompanies you for a very long time--almost seven to ten years after you have filed. It basically gives you very little freedom and is not viewed well by creditors.. And this is precisely why debt settlement will provide you with a better option than debt consolidation