Settling your debt is an admission that you are struggling to keep up with your bills. Offering your creditors less than you owe is usually going to harm your credit score. The first way you lose is by letting your payments go past due.
(prHWY.com) March 12, 2012 - Pennsylvania, PA -- Finding relief from your debt can be hard to do sometimes. Not knowing where to turn for help can be a scary feeling. However, there are many ways you can get relief from your debt and end the cycle of late payments. Your two main options are debt consolidation and
debt settlement. What kind of relief can you expect from these options?
Debt Consolidation
Consolidating your debt involves merging all of your current debts into one monthly payment. Doing so will reduce the interest rate paid on the debt. Debt relief services can even reduce the balance that you owe on your debt. Most of your secured and unsecured debts are eligible for a consolidation.
Debt Settlement
Settling your debt involves making an offer to your creditors to pay less than you owe. Most offers will be for about half of the outstanding debt. It is perfectly acceptable for you to make an offer on your own.
Debt settlement companies are also available to negotiate with your creditors for you.
Why Consolidation Is Different Than A Settlement
Debt consolidation will usually have no impact on your credit score. This is because most consolidation options have nothing to do with how well you handle your debt. Home equity loans are simply available to tap equity that you have earned through the years. Conducting a balance transfer is just taking advantage of the marketplace to get the best deal on a credit card. Most consolidations will not reduce your overall debt balance.
Why Settlement Is Different Than Consolidation
Settling your debt is an admission that you are struggling to keep up with your bills. Offering your creditors less than you owe is usually going to harm your credit score. The first way you lose is by letting your payments go past due. Creditors typically will not settle a debt that is up to date with payments. The second way you lose is by settling with a debt relief service. Doing so will be noted on your credit report.
It is important to know the subtle differences between consolidation and settlement. Knowing what you are getting yourself into will help you make the best choice regarding your debt. Potentially keeping your credit score intact will be helpful once you have your debt under control.
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