Debt Consolidation Or Debt Settlement – Discover Which Is The Better Choice For You
Deciding whether to go with debt consolidation or debt settlement can sometimes be a tricky thing, so in this article I’ll outline both options in an effort to make your ultimate decision an easier one.
Consolidation works by merging all your debts into one single debt, which is then managed over a period of time by a debt consolidation company. With consolidation, there is no immediate reduction in the total owed, but you can get some reprieve, particularly if one or more of the debts have been passed on to the collectors.
Debt settlements on the other hand, does reduce the total owed, and this is achieved through a negotiation with the creditor for such a reduction. As an option for immediate benefits, settlement trumps consolidation by a mile, and not surprisingly, more and more people are turning to this form of debt relief.
Many people once they decide to use debt settlement as a form of relief, start worrying unnecessarily about it’s impact on their credit score. The reality is that it’s impact whilst not overly positive, is not anything to worry about. At most, it will stay on your record for a maximum 2 years, and in most cases the moment you settle a debt, you begin immediately to rebuild your credit standing. Compare this 2 year impact to relief measures like bankruptcy, which lasts up to ten tears, and you begin to see why the benefits far outweigh the 2 year impact on credit scoring.
Another reason that debt settlement is better than consolidation is the fact that the companies that offer settlement services are not associated with high upfront fees that are typical among debt consolidation companies. Consolidation companies will often extend the life of the total loan into the years in order to milk you for a profit.
When looking for debt settlement companies it is a good idea to start your search on the internet. This will expose you to a large pool of companies, which will give you more flexibility of choice and a greater chance for cost-savings. Online debt settlement companies are also cheaper than their traditional offline counterparts.
Now that you see the outline I hope you are confident about making a choice between debt consolidation or debt settlement. Remember, for immediate benefits, settlement is your better option. And by using an online company, you’ll not only save money in consultation fees, but through the many discounts that are offered from time to time.