subject: Debt Settlement And Debt Consolidation – Which Option For Debt Relief Is Better For You? [print this page] Debt Settlement And Debt Consolidation Which Option For Debt Relief Is Better For You?
Debt settlementanddebt consolidationare both ways for reducing and eliminating your debt. Since they are different concepts, then they also have different impacts on your credit score and financial options in the future. It is best to know a little bit more about them before choosing which is best for you.
Debt Settlement means that your creditor takes away a part of your debt. This will give you immediate relief to your monthly budget. This also makes your other debts more manageable, and helps youbuild your creditscores again. On the other hand, this makes your credit a lot lower at the onset of choosing it. You will also have to deal with the tax implication and may even pay additional taxes depending on the state where you live.
Debt Consolidation means that a company helps you with negotiating with your creditors to get lower rates; then you pay the debt consolidation company who pays all your accounts monthly. These companies even help with paperwork, cancelling fees and closing accounts. Through this, it is possible for you to be out of short term debt within five years or less. In addition, this option has less impact on your credit score. The lenders usually prevent you from getting more credit until you can already make regular payments. You simply need to track your account to see if the company is paying you accounts on time.
Armed with this basic information, you can now be the judge on which is better for you. Will you go for debt settlement or debt consolidation?
There is no perfect solution to getting out of debt. You must analyze your current situation and analyze whether debt settlement or debt consolidation is better for you.
