subject: Credit Card Debt Consolidation Vs Debt Settlement - Which Makes More Sense For You? [print this page] Credit Card Debt Consolidation Vs Debt Settlement - Which Makes More Sense For You?
Debt has really become the concern of each and every individual in United States after the recent bang of recession. Large numbers of individuals get dependent on plastic money after getting laid off from their jobs and that is the main reason of huge credit card debts. In order to meet up day to day expenses of their families' people use the credit card extensively but when it comes to the repayment people find that late fee and other penalties made the debt amount doubled. This thing really makes the person totally unable to pay back the credit card bills.
In order to provide relief to the individuals many options are available in the market. While doing the selection for any of these methods it is advisable for the person that he should study all the methods so that he can select the best and reliable one for him. Both debt settlement and debt consolidation can reduce credit card debts but each of them will create different impact on the person credit ranking. Before selecting any one of this method it is really important for the person to know about the all the pros and cons of these methods.
Debt settlement means that person is free from credit card debts in no time and he will not be facing any sort of financial crises any more. Person will be able to get immediate relief in monthly budget and the rest of the payments will get more manageable for him. Once the debts are clear person is able to get the loan from banks and other financial institutions easily.
There are also few disadvantages of debt settlement there. Biggest one is that it creates direct effect on your credit scoring and it will get negatively impacted.
Debt consolidation is the method which basically refers to the idea of merger of credit card debts. At the same time increases in number of monthly installments by decreasing the interest rate. This method is time taking as the person has to give monthly installment for the longer period of time.
Debt consolidation will have much more less impact on your credit scoring. Many of the banks or financial institution will put an impermanent on extending more credit until and unless they watch out for the person regarding the regular payments.
There is no perfect solution to come out from the pool of debts but still debt settlement is considered to be the best way for the elimination of credit card debts.
Debt settlement is the best alternative to bankruptcy and usually makes financial sense for consumers with over $10k in unsecured debt. Consumers can expect to eliminate 50% of their unsecured debt on average.
