Debt Settlement Vs Debt Consolidation – Which Makes the Most Financial Sense?

When it comes to choosing a certain way to get rid of your debt, most people find themselves confused because there are so many ways available and they don’t know what to choose. In this article we will compare debt settlement and debt consolidation and find out which one fits best for a certain type of consumer.

If we are talking about a person who has secured debt, debt that is lower than ten thousand dollars, or secured debt that is huge and consists in many loans we should definitely talk more about debt consolidation. Financial consolidation actually means taking a loan with lower interest rates and paying the existing loans in order to create less debt and make sure that the person with loans has fewer loans to pay each month. Debt consolidation actually works with any kind of loan and there is no minimum amount of debt you have to get before applying for debt consolidation. There are many advantages to financial consolidation: it doesn’t lower your credit score that much, the process is not stressful at all, and you can get rid of your debt in a couple of years. If you negotiate a good rate on your new loan you can even save some money.

Financial settlement is another good option that started to be used more and more often since the recession began. Unfortunately, when it comes to debt settlement a person has to have a minimum amount of debt, that minimum amount is ten thousand dollars. The debt has to also be unsecured because if the debt is secured there is no reason for your creditors to accept your negotiation because they can take whatever is attached to your debt. With debt settlement you get reductions in your debt and you get to pay the rest of it in a couple of years. It is a fast payment plan and it works most of the times. It saves a lot of money and it doesn’t have a bad influence on your credit score.

No matter what you choose, inform yourself about the option before choosing it. You might find out different aspects of the problem that might not suit your needs. The good thing is that there’s always a solution available.

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