Consolidation
and Settlement
There are three things you can look at here - debt
consolidation, debt settlement, or debt consolidation and
settlement. If you have a lot of monthly debt, and you are
having a hard time making all of your credit card payments, you
are going to want to look into using one of these to help you
out.
A debt consolidation is simply taking all of your debts and
putting them into one debt consolidation loan. You still pay
back everything you owe, but you do it at a lower interest rate
and over a set period of time – usually three years. Then in
three years you are debt free and your credit looks fabulous
again.
A debt settlement means that you enter into an agreement with
your creditors to write off a portion of your debts. Instead of
paying 100% of the debt that you owe, perhaps you pay 60% or
something like that. You are able to pay down the debts because
you owe less and it saves you hundreds, even thousands of
dollars over the years. This method however, can hurt your
credit as your reports will be marked settled for any debt that
you settle on.
Then there is the debt consolidation and settlement combo. They
work together, but serve different purposes. The debt settlement
is the act of negotiating how much money you are going to pay
back, and the agreement is outside of the debt consolidation.
Once you have that agreement you then get a debt consolidation
loan to compile all of your renegotiated bills into one debt
consolidation payment. This is good for those people who can pay
back a smaller amount over all than they could have otherwise.
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