Published On: Sat, Feb 29th, 2020

Which Is Better: Debt Settlement Or Debt Consolidation?

When you are suffering from a debt ridden situation, there are ways to come over your debts. Debt consolidation and debt settlement are two of the methods to get rid of the debts. So, let us discuss, which method is more suitable in your financial situation.

photo/ Michael Jarmoluk via pixabay

Debt Consolidation: The consolidation process takes place when one or more accounts get clubbed into one account. If you are not aware of the process of the consolidation process, you can take help from an agency, which can perform the debt consolidation on behalf of you. If you are doing it on your own, you can do it through the unsecured loan or the credit card on balance transfer. Sometimes, when you are looking for the debt consolidation companies, you may come across the debt management or the debt settlement company.

Debt Settlement: Debt settlement is nothing, but an agreement with you and your lender, where you are required to pay less than you currently owe. You can negotiate, with your lenders on your own, or can take help of the professional experts.

Which One Is Right For You?

Here are some situations when you should consider the debt consolidation:

  • If you are paying in various accounts, with high interest rates. For example, the credit card debts.
  • If you are paying into various accounts and facing issues in keeping a track, you can go for debt consolidation.

When Debt Consolidation Is Not Right For You

You can go through the debt settlement reviews to know when the debt consolidation is not right for you. Though it can be a great tool when you are struggling to pay various accounts, there are some situations when the debt consolidation may not work for you. When your credit score is very low, this process may not be suitable for you. If you are unable in making the monthly payments, you may not be approved for credit and you will have to look harder in your situation of debts.

Should You Settle Your Debts?

Debt settlement can be considered as the last resort where the debt consolidation can be considered as the first stage towards your debt pay off. For avoiding the bankruptcy, you can go for the debt settlement. These are some situations to consider:

  • If you are seriously falling behind the payments
  • The credit score is low and cannot be approved for the line of credit or the loan of debt consolidation
  • You have set aside some money for the settlement

When Debt Settlement Is Not Right For You

If you are not in a situation at all to pay the monthly payments, you are not in a stage of debt settlement. Then you should consider the bankruptcy.

The individuals, who have faced the debt situations, know that paying off debt requires time and there is no easy way out. So, if you can create a financial plan with more control, you can easily prevent the cycles of debts. You can create a life free of debts just by changing your lifestyle a bit.

Author Bio: Sam Daniel is a popular debt consultant who provides various debt settlement reviews. In this write-up, he is discussing whether the debt consolidation or the debt settlement is right for you and in which situations.

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  1. Andy Brown says:

    When suffering from debts, there comes the ways to settle that. There will be many ways to overcome the burden of debt. This article covers the two ways of overcoming the debt burden are Debt Settlement and Debt Consolidation. This article is very nice as it excellently explain both the concept Debt Settlement and Debt Consolidation; if anyone doesn’t have the knowledge about above concepts can gain an absolute knowledge about it and accordingly take the right decision. Debt consolidation made super easy because it has low interest rates. The points in the article are described very well and they are up to the mark. Thank you for posting such great information. Keep it up.

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