subject: Credit Card Debt Consolidation - Is Credit Card Consolidation Better Than Debt Settlement? [print this page] Credit Card Debt Consolidation - Is Credit Card Consolidation Better Than Debt Settlement?
For a debt relief strategy, is credit card consolidation a better method than debt settlement? Consider both scenarios if you're looking to get out of debt and need a debt relief plan:
~ Credit card debt consolidation. If you consolidate, you're basically taking all of your credit debt and putting it into one big pile. The advantage is having one payment, possibly at a lower interest rate than the former separate piles, but the amount you owe really hasn't changed. If you owed $10,000, you still owe $10,000. You no longer have little payments spread out over the month, you now have one gigantic payment due once a month and you'll probably be saving from one paycheck to the next so you can pay that one. And if you can't pay the big one, well, there might just be a penalty. Credit debt consolidation isn't really debt relief, where's the relief come in?
~ Credit card debt settlement. If you opt instead to check into financial settlement, you may discover a better method. Financial settlement is not consolidation, it's more elimination. Getting out of debt is the idea behind debt settlement. Engaging a sound financial settlement company to work with you on settling your debt can result in a reduction in the total amount you owe. Taking debt, reducing it down, and then paying it off. Now that's debt relief. Financial settlement companies negotiate with credit card companies to seek a lower payoff amount. It's perfectly legal and in some cases, the amount may be reduced up to 50% of what you owe. If you owe 50% less, the logical conclusion is that you will be able to pay it off faster. Credit debt consolidation might take 4 or 5 years, but it is not unreasonable to pay off a credit card financial settlement in 1-2 years.
So if you're thinking of consolidating all your smaller credit cards into one big debt mountain, you might rethink it. A credit debt settlement might make more sense as a method of financial relief.
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.
