Debt consolidation vs debt settlement: which makes more sense?
Debt consolidation vs debt settlement – it’s the question asked by many individuals who are looking for the best way to get out of debt.
What are the differences between debt consolidation vs debt settlement? Debt consolidation involves taking a single new loan to pay off old loans. Debt consolidation can help to simplify your finances, as you’ll be making fewer payments each month. And theoretically, debt consolidation can reduce your monthly payments if the new loan has a lower interest rate. But for people who are deeply in debt, it can be hard to find a lender willing to offer a good interest rate, and simply consolidating debt may not help you pay it off any faster.
A debt settlement plan involves refusing to pay your bills to get creditors to settle debt for less than what you owe. Does debt settlement work? For some people, it does. But it leaves others more deeply in debt. And then there’s the debt settlement credit impact – when your accounts become delinquent, your credit rating will be damaged, making it hard to apply for credit, loans and credit cards for number of years.
When considering debt consolidation vs debt settlement, it’s helpful to seek consolidation or debt settlement advice from a financial professional who can help you sort out the advantages and disadvantages. That’s where the credit counselors at American Consumer Credit Counseling (ACCC) can help.
Get advice on debt consolidation vs debt settlement from ACCC.
When you’re evaluating debt consolidation vs debt settlement, free credit counseling from ACCC can help you understand how each approach works and identify other possibilities for paying down your debt. As a nonprofit organization, we are dedicated to helping individuals and families find the best path out of debt and develop the skills and habits to stay debt-free in the future.
In your first free credit counseling session, we’ll help you evaluate your financial situation and look at debt consolidation and debt settlement pros and cons, as well as the benefits of strategies for getting out of debt. We can also direct you to helpful resources and to a wealth of educational material on our website that can help to identify how to settle credit card debt most effectively, and to sort out the differences in debt consolidation vs debt settlement.
Debt consolidation vs debt settlement: additional options.
When you’ve considered debt consolidation vs debt settlement and aren’t convinced of the benefits, you might be better off with a debt management program instead. The advantages of debt management over debt consolidation vs debt settlement include:
- A budget you can live with. We’ll help you create a budget that will let you pay down your debt while still having money for the things you need.
- No default. Rather than refusing to pay your creditors, we’ll make sure they get paid on time every month. You can send one payment to us, and we’ll take care of paying your bills on your behalf.
- Saving money. We’ll work with your creditors to look for reductions in finance charges, late fees, interest rates and over-limit fees to reduce the amount you owe.
- Better credit. By continuing to pay your creditors, you won’t do lasting damage to your credit rating.
- Debt-free fast. Most consumers on a debt management plan can be debt free within 60 months.
