Which is Better for Your Needs?
When faced with debt it can be difficult to figure out which one
is better for your needs – debt consolidation or debt
settlement. It really depends on your situation and how much
money you owe. It also depends on how much money you have and if
you will be able to pay back your debt based on one instead of
the other.
The idea behind debt consolidation is that you simply take all
of your outstanding debts and lump them together into another
loan. This debt consolidation loan pays off all of your other
debts and leaves you with one monthly payment. You then pay off
the debt consolidation and you are left debt free. This is good
for people who want to streamline the debts that they have and
are paying out, and it is also good for those people who want a
lower monthly payment than what they have been paying, and will
be able to pay a new slightly lower amount.
However, if you re not going to be able to pay off your debts
with a slightly lower amount, you might want to look into debt
settlement. With a debt settlement you use a company who
contacts your creditors for you and they negotiate a smaller
amount to be paid. They then write off the remainder of the debt
and you pay back just a portion of the debt. If you have many
creditors that you are negotiating with, you might find that you
have to get a debt consolidation in conjunction with it to pay
them back.
However, a debt settlement will reflect negatively on your
credit as you are not paying back the full amount that is due.
Instead, you are only paying back a portion of that debt. The
debt will usually be marked as settled, which although not as
bad as bankruptcy, is still not a good way to go.
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