Debt Consolidation vs Debt Settlement:

To many people, the terms debt consolidation and debt settlement are synonymous-they aren’t.  There is a vast difference between debt consolidation and debt settlement.  Both are use to help debtors repay his or her creditors, however it is important to understand the difference between both practices.  This will ensure that the debtor makes a qualified and informed decision when choosing a debt management strategy.

Debt consolidation is the process of taking out a loan that is used to repay all of your debts.  However, debt consolidation involves more than simply finding a loan that will let you pay your creditors individually.  It involves the use of financial counselors or a financial company that will negotiate the arrangement with your creditors for you.  When you work with a company for the purposes of debt consolidation, you will make one monthly payment to the company, who will then distribute that payment to your creditors according to the arrangement that the company has negotiated.

Debt settlement differs from debt consolidation as a loan is not involved (though it can be) and the nature of the debt repayment is different.  With a debt settlement program, the company that you are working with will contact your creditors for you and negotiate a lower amount for your debts. This applies to all of your debts, and they typical savings are a 60% settlement for the amount of your debt.  When you enter into the debt settlement program, the debt counselors will handle your creditors for you.  You will put money into your debt settlement account, and when there is enough money to repay your creditors, the payments will be made.  Then you will repeat the process until all of your debts are paid.  This process varies from debt consolidation, as debt consolidation involves one loan that is used to repay all of your debts.

When a person has serious debt to deal with, they may be confused regarding the best strategy to take.  Today, more people are dealing with debt then ever before.  The cost of living has increased, job security is shaky, and people are finding themselves facing obstacles they never dreamed about. When determining between debt consolidation and debt settlement it’s important to look at several factors regarding your debt.  It’s also important to discuss your personal situation with a trained and experienced debt counselor.  The debt counselors at Debt Remedy Advice are trained and certified with The Association of Settlement Companies as well as the International Association of Professional Debt Arbitrators.  This ensures that when you get in touch with debt counseling experts from Debt Remedy Advice, you are working with a team of professionals that value your level of trust.

There are many factors to take into consideration regarding whether or not a debt settlement program is right for you.  However, your first step is to call and discuss your personal situation.  If you are dealing with debt and are looking for solutions, then contact us either through our website or by our toll free number.  Our debt counselors are ready to work with you and help you determine the best strategy for your needs.

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