The author of this website is NOT an attorney and the information contained herein
does Not constitute legal advice. Actual results may vary not available in all areas.
does Not constitute legal advice. Actual results may vary not available in all areas.
Debt Settlement Vs. Debt Consolidation
Debt settlement and debt consolidation both offer ways of reducing your debt. Debt
settlement eliminates part of your loans, while debt consolidation reduces interest rates. Even
though debt consolidation has the least impact on your credit score, there are cases when
debt settlement is a better option.
Lower Debt
The goal of both debt settlement and debt consolidation is to lower your debt. Debt
settlement companies negotiate with your creditors to sometimes reduce the amount of your
unsecured debt. There will be a fee associated with the program that equates to roughly 1%
of the interest that you will pay if you continue to pay the creditors directly.
Debt settlement can reduce your debt 40% to 60%. A debt settlement program can also cut
our payments by 40% in most cases making it easier to cope with your monthly budget. In
most cases for a consumer in a debt settlement program they are typically debt free within 2-
3 years that can be about half the time it would take in a Consumer Credit Counseling
Program or a conventional debt consolidation loan.
Debt consolidation pays off your high interest debts with a low interest loan. Home equity
loans provide the lowest rates, but after stretching out the loan over 20 years the 6% interest
refinance winds up costing the same amount as a 21% interest credit card. A conventional
bank loan will not pay off the debts but rather transfer the debt from one institution to
another. This action appears to banks and mortgage companies as a last ditch effort on a
consumers part to try and rectify a sinking situation. Many mortgage companies see debt
consolidation loans as a sign of stress in your financial situation making it difficult for them to
extend you credit in the future.
Credit Score Implication
Reducing your debts through debt settlement is a method to get out of debt in a short period
of time relative to your credit history. You credit score will drop, making you ineligible for
prime lending situations. You can apply for sub-prime credit after a year however the goal of
a debt settlement program is to get out of debt not to create new ones.
Taking out a loan to consolidate your debt will have a major impact on your credit. Since your
debt isn’t actually decreasing, you will be negatively hit on your credit for opening another
account making your overall situation more overextended. Most debt consolidation loans are
issued with the assumption that the problem debt will be paid off and then the accounts
closed. However 98% of consumers that get a debt consolidation loan do not close the
problem accounts but rather make things worse by incurring new debt on the paid off
accounts. Now the consumer is faced with the debt consolidation loan in addition to the new
debt on the other accounts that were previously paid off.
Financial Choices
No one financial choice will fit everyone’s needs. While debt settlement will have an affect on
your credit report, additional loans may be too expensive. In extreme cases, debt settlement
can help to avoid bankruptcy and costly debt consolidation loans. Many debts settlement
companies report that about 50% of the debt that their clients put into the program is debt
from a prior debt consolidation loan.
Debt settlement and debt consolidation both offer ways of reducing your debt. Debt
settlement eliminates part of your loans, while debt consolidation reduces interest rates. Even
though debt consolidation has the least impact on your credit score, there are cases when
debt settlement is a better option.
Lower Debt
The goal of both debt settlement and debt consolidation is to lower your debt. Debt
settlement companies negotiate with your creditors to sometimes reduce the amount of your
unsecured debt. There will be a fee associated with the program that equates to roughly 1%
of the interest that you will pay if you continue to pay the creditors directly.
Debt settlement can reduce your debt 40% to 60%. A debt settlement program can also cut
our payments by 40% in most cases making it easier to cope with your monthly budget. In
most cases for a consumer in a debt settlement program they are typically debt free within 2-
3 years that can be about half the time it would take in a Consumer Credit Counseling
Program or a conventional debt consolidation loan.
Debt consolidation pays off your high interest debts with a low interest loan. Home equity
loans provide the lowest rates, but after stretching out the loan over 20 years the 6% interest
refinance winds up costing the same amount as a 21% interest credit card. A conventional
bank loan will not pay off the debts but rather transfer the debt from one institution to
another. This action appears to banks and mortgage companies as a last ditch effort on a
consumers part to try and rectify a sinking situation. Many mortgage companies see debt
consolidation loans as a sign of stress in your financial situation making it difficult for them to
extend you credit in the future.
Credit Score Implication
Reducing your debts through debt settlement is a method to get out of debt in a short period
of time relative to your credit history. You credit score will drop, making you ineligible for
prime lending situations. You can apply for sub-prime credit after a year however the goal of
a debt settlement program is to get out of debt not to create new ones.
Taking out a loan to consolidate your debt will have a major impact on your credit. Since your
debt isn’t actually decreasing, you will be negatively hit on your credit for opening another
account making your overall situation more overextended. Most debt consolidation loans are
issued with the assumption that the problem debt will be paid off and then the accounts
closed. However 98% of consumers that get a debt consolidation loan do not close the
problem accounts but rather make things worse by incurring new debt on the paid off
accounts. Now the consumer is faced with the debt consolidation loan in addition to the new
debt on the other accounts that were previously paid off.
Financial Choices
No one financial choice will fit everyone’s needs. While debt settlement will have an affect on
your credit report, additional loans may be too expensive. In extreme cases, debt settlement
can help to avoid bankruptcy and costly debt consolidation loans. Many debts settlement
companies report that about 50% of the debt that their clients put into the program is debt
from a prior debt consolidation loan.
"Better Than Debt Consolidation Better Than Bankruptcy"
Get Out Of Debt Today! Call Us 1-866-791-2455
| We Can Settle Credit Cards Debts, Taxes, Collection Accounts, Repossessions, Medical Bills And Unsecured Loans. |
| You Must Have At Least $10,000 Dollars Of Debt |
Get Out Of Debt Today! Call Us 1-866-791-2455
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