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Debt Settlement Vs Debt Consolidation

Do you find yourself under lots of monthly bills or high-interest debts at the month-end? It is all because you were not able to manage your financial budgets and did not track all of your payments. If you are running short of cash for basic living expenses then you are in great hassle. 

When you are struggling with your debt, the first step you should take is to look for different options to get relief from your financial burden. After searching you will come to an end of two solutions: Debt Settlement and Debt Consolidation. Though both sounds similar, they are two different processes to get relief from your debt. Therefore look for those to choose the best one for your debts.

Here at Debt Consultation, you can find free consultations with experts to understand both and get detailed information on debt settlement vs debt consolidation.

What is Debt Consolidation?

Debt Consolidation is a process used to combine multiple debts into a single consolidation loan. This debt relief idea is, instead of owing money to many creditors, go for one. It allows you to reorganise your multiple debts into a single combined total. To simplify this process the common ways to do so involve credit cards with zero balance transfer debt consolidation loans along with personal loans from credit unions or banks.  Debt consolidation helps to get paid all your old debts with a single new one. 

Types of Debt consolidation

Debt Consolidation can be the right choice for you in different circumstances:

Simplify your debts: Instead of managing multiple debts and monthly payments, you can combine them all into one. So that you can reduce your stress in calculating so many debts simultaneously. 

Get a lower interest rate: Debt consolidation may be a good choice if you can get a lower interest rate on the consolidated debt. 

Plan for paying off debt: If you are not experiencing financial stress, then debt consolidation may help you get your debt under control or pay off your debt altogether. If you are focusing on paying off debt, then debt consolidation can help to reduce your interest rate, get better organised about paying off debts, and otherwise put you in a stronger financial position. 

Get a free debt relief consultation from online Debt Consultation

What is Debt Settlement?

Debt Settlement is a form of debt forgiveness where the creditors can allow the debtor to pay a part of the amount that they actually owe. The debt settlement helps the debtor get a reprieve from their creditors in terms of a part of the loan repayment amount. It can be risky at some point, so you can reserve it as your last option. Debt settlement involves the process where if you are delinquent on your bills, you need to make an agreement with the creditors. But after a certain period of time, you need to repay a percentage of the total amount that you owed them. The debt settlement process can damage your credit score and will appear on your credit reports for several years.  Again, if you achieve success to make your debt forgiven, you still have to pay tax on your forgiven amount. 

Debt settlement

When your Debt Settlement makes sense:

When you are out of options: If your credit is not perfect, don't want to apply for any more loans, can't qualify for a lower-interest debt consolidation loan or transfer credit card, there you need to consider debt settlement. 

Not ready to declare bankruptcy: If you are not able to declare bankruptcy or you have debts that can't be discharged as bankruptcy, then debt settlement can be a solution you may look for. 

Ready to hit your credit report: Once your debts are unmanageable and it is giving you enough stress then you can take risk of hitting your credit report. You can hit your credit report due to delinquency and can pursue debt settlement. 

Get a free debt relief consultation from online Debt Consultation

Debt Settlement vs Debt Consolidation

debt settlement Vs debt consolidation

Debt Settlement vs Debt Consolidation: Which one is better?

If you have to choose between the two then it all depends on your debts and financial conditions. If your debt is manageable, consolidation can simplify and reduce your monthly payments. It will help to pay your debt off sooner. 

Whereas debt settlement is a half-step from bankruptcy. When you can't see a solution, missed your payments, collection agencies are calling you repeatedly, and your credit score has already taken a big hit. Now you can use your debt settlement solution. 

Whichever solution you may show interest in, it means that you are trying hard to take care of your problem. It means you want to be a responsible person rather than just hoping it goes away. Therefore, look carefully at your circumstances so you can make a decision that helps you to be financially sound. If you are not able to choose anyone then take the help of Debt Consultation, one of the best debt consolidation companies. Have a free consultation with the experts to know which debt solution is most suitable for you. 

By Author: Samara Miller | 24 May 2022
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More Blogs is an independent marketing service that is supported by advertising. It is not provided by the companies whose products and service are discussed. Opinions expressed here are alone and have not been reviewed, approved or otherwise endorsed by any third party. The company is not a lender, creditor, or debt collector. Consumers may access a variety of consolidation options in addition to a loan. Consumers should be aware that interest rates for consolidation loans typically range from 5.99% to 35.99% Annual Percentage Rate (APR). It is recommended that consumers consult with a qualified financial advisor before taking on a consolidation loan. We do not discriminate on the basis of race, color, religion, sex, marital status, national origin or ancestry. This website is owned and operated by AXAD ,LLC, a provider of information and resources to help consumers understand and access consolidation options.