There has always been a heated dispute from those that espouse debt settlement and those that favor debt consolidation. It appears that debt settlement has the upper hand for now.
What are debt consolidation programs?
Debt Consolidations is essentially getting a new loan to pay existing creditors. There you combine various loans, which makes it simpler to manage since one loan and one payment result. Of course you are charged interest and old creditors must be satisfied.. Your principle amount remains the same, so you still owe the same amount. The payments and interest rate may reduce giving you the opportunity to retire your debt quicker.
To become debtfree takes more time and all depends on the amount of debt.
This is exactly why many espouse debt settlement as a debt elimination method instead of debt consolidation.
So what then is Debt Settlement?
Debt settlement involves a negotiation with your creditors to reduce the amount you owe anywhere from 25 to 70 percent. Debt settlement is a debt elimination mechanism when you are on the brink of bankruptcy. At this point your credit standing and credit score have already been impacted since you most likely have missed or been late on payments. Getting your debt to income ratio lowered with the help of a professional debt settlement company is most likely your best option
After you have settled your debts you may begin restore credit.. Although it will take time to restore your credit and standing. This saves you from declaring bankruptcy, which really should be your last option if you are in debt.
Bankruptcy accompanies you for a very long time--almost seven to ten years after you have filed. This takes away your financial freedom and brands you as not credit worthy in the eyes of creditors. This is the reason many feel that debt settlement is a better debt elimination solutions than debt consolidation
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The debt elimination method you choose depends on your circumstances and preferences, but you can be DebtFree
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