Debt Settlement Help or Debt Consolidation

It doesn't take too much to tip you over the edge when it comes to debt. One major purchase on your credit card, and suddenly you have to pay more each month than you earn. When this happens, your debt only continues to grow. It can seem like there is no end in site other than bankruptcy. The good news is that there are professional organizations that you can get in touch with that can help you resolve the problem before it gets to that point. There are two basic ways that you can do this, debt settlement and debt consolidation.

Debt settlement is a service provided by debt help organizations that negotiate on your behalf. They take on the role of your attorney, and get in touch with your creditors. They then negotiate the terms of your debt with the creditors. Since the creditors won't get anything if you file for bankruptcy, they are usually willing to renegotiate. In many cases, you can get as much as half of your debt eliminated.

Debt consolidation is a different service. This is when all of your debt payments are combined together into one. Either by taking out a loan, or by negotiating with your creditors, these new payments have a lower interest rate and a lower monthly amount than your previous payments.

With both options, you can spend less each month on debt, paying an amount that matches your budget. If you choose debt settlement, you will be able to pay off your debt faster, because there is less of it. On the down side, this has a negative impact on your credit score, and you might have to pay taxes on the debt that has been eliminated. Debt consolidation, on the other hand, does not have a negative impact on your credit score, and will help it as long as you make your payments on time. However, since your monthly payments are lower and the total debt hasn't changed, you will end up paying off your debt for a longer period of time.

As you can see, both settlement and consolidation have their own benefits and disadvantages. The option that is best for you will depend on your circumstances. The disadvantages should be enough to discourage anybody who doesn't have serious problems with debt. Nevertheless, some people are simply in denial about the fact that they owe more than they can spend. Be sure to take a realistic look at your financial picture before dismissing either option.

It doesn't take too much to tip you over the edge when it comes to debt. One major purchase on your credit card, and suddenly you have to pay more each month than you earn. When this happens, your debt only continues to grow. It can seem like there is no end in site other than bankruptcy. The good news is that there are professional organizations that you can get in touch with that can help you resolve the problem before it gets to that point. There are two basic ways that you can do this, debt settlement and debt consolidation.

Debt settlement is a service provided by debt help organizations that negotiate on your behalf. They take on the role of your attorney, and get in touch with your creditors. They then negotiate the terms of your debt with the creditors. Since the creditors won't get anything if you file for bankruptcy, they are usually willing to renegotiate. In many cases, you can get as much as half of your debt eliminated.

Debt consolidation is a different service. This is when all of your debt payments are combined together into one. Either by taking out a loan, or by negotiating with your creditors, these new payments have a lower interest rate and a lower monthly amount than your previous payments.

With both options, you can spend less each month on debt, paying an amount that matches your budget. If you choose debt settlement, you will be able to pay off your debt faster, because there is less of it. On the down side, this has a negative impact on your credit score, and you might have to pay taxes on the debt that has been eliminated. Debt consolidation, on the other hand, does not have a negative impact on your credit score, and will help it as long as you make your payments on time. However, since your monthly payments are lower and the total debt hasn't changed, you will end up paying off your debt for a longer period of time.

As you can see, both settlement and consolidation have their own benefits and disadvantages. The option that is best for you will depend on your circumstances. The disadvantages should be enough to discourage anybody who doesn't have serious problems with debt. Nevertheless, some people are simply in denial about the fact that they owe more than they can spend. Be sure to take a realistic look at your financial picture before dismissing either option.