whats the difference between debt settlement and debt consolidation and which one is more preferable?

May.03, 2009 in Debt Consolidation

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i m in credit card debts rite now and my current creditors charge me upto 30 pecent interest what are the best ways to get it worked out for example do u suggest me debt consolidation or debt settlement? which one is more preferred or if there is any pro and cons associated with any of those or if u have any other suggestions ? thanks

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2 Comments on “whats the difference between debt settlement and debt consolidation and which one is more preferable?”

Jedi Master YODA
May 6th, 2009 at 9:57 pm
Debt consolidation is when you consolidate your personal outstanding debt into one account where you make one payment. Usually this action is taken to prevent bankruptcy filings BK-7 and BK-13. Debt settlement is when you negotiate with a Creditor or there representative to settle a debt with a partial sum to clear or close the account or debt owed in full. Usually this occurs in a past due account or with a Collection Agency. Negative Credit Reporting to the 3 major CB’s can adversely affect your credit, employment and financial records and a BK will stay on your records for 7 to 10 years this will prevent you from buying major purchases such as a car, home, etc in the future. Start by making yourself a budget for your monthly income and expenses to avoid problems in paying off credit accounts. Credit is good to have and you need to maintain financial responsibility to preserve your credit rating and good standing. GOOD LUCK!
vivianmopena
May 10th, 2009 at 5:23 am
Debt consolidation doesn’t lower your principal. It consolidates; therefore, it doesn’t get you anywhere. It doesn’t help you in that regard. You may try to negotiate a lower interest rate for your credit card just by calling them. 30% is way too much.

Debt settlement lower your principal of your total credit card debt . In some cases, depends on how delinquent your accounts are, debt settlement companies can lower your debt up to 40% to 60%.

The pros for debt settlement is it’s actually helping you getting out of debt much faster since your principal will be lower to at least 40% less than what you owe. Unlike debt consolidation, it just consolidates your debt. It doesn’t lower your principal. The cons for both debt settlement and debt consolidation is that both options will hurt your credit. But if you are already late on your payments, then your credit is already less than perfect.

You should call one of these companies and see what they have to say. Most of them have free consultations anyway. It doesn’t hurt to call them. Try to call these folks up and see what they have to say.