If you are struggling with credit card debt, it is highly likely that you have or will consider speaking with a debt relief professional to help you get out of debt. Debt Settlement and Debt Consolidation are frequently used debt relief programs that are designed to help people get out of debt. More often than not, people confuse Debt Consolidation with Debt Settlement and vice versa. In terms of similarities, they are both debt relief programs but in reality, are very much different. Here are the major differences between Debt Settlement and Debt Consolidation.
- Debt Consolidation involves obtaining a new loan to consolidate other loan(s) into one new loan and payment.
- Debt Consolidation terms are often times based on your credit and other compensating factors. Credit and income could impact your loan terms meaning higher interest rates for individuals with fair to poor credit.
- Debt Consolidation does not reduce the amount of money you owe to your lenders or creditors. You are simply obtaining new loan terms and paying on the same amount of money you previously owed plus interest and any associated costs with the consolidation program.
- Debt Settlement does not involve taking out any new loans or obtaining new credit
- Debt Settlement qualification is not based on credit, income or other traditional factors. It is merely based on your ability to pay, your hardship and your specific information.
- Debt Settlement’s goal is to negotiate with your creditors to pay back a reduced amount of debt.
- Debt Settlement can get you out of debt in a typically shorter period of time than other debt relief options.
As you can see, Consolidation and Settlement are very much different and both are effective debt relief options for the right individuals. Consumers should understand and explore all debt relief options before making a decision to move forward with one. Brownstone Law Group offers a completely free, private consultation where you can learn about all of your debt relief options. Call us today at (888) 853-8871 or visit our website at http://www.brownstonelawgroup.com/practice-areas/debt-negotiation to learn more about Debt Settlement and how it may benefit you.
This article has been reviewed and approved by Thomas A. Moore, managing attorney Brownstone Law Group, PC. California Bar # 148698. This article is for informational purposes only, does not provide legal or tax advice of any kind or form any type of attorney/client relationship. This article was published on August 31, 2015
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