Thursday, January 7th, 2010

Which is the better option in regards to reducing debt: debt consolidation or debt settlement (negotiation)?

Debt Negotiation
Roderick C asked:


There has been considerable debate between two specific debt reducing options: debt consolidation and debt settlement (negotiation). I’m trying to decide which is the best option to select if one wants to reduce their financial debt (specifically credit card debt). I’m sure there’s pros and cons to both options, however which is more effective? Please advise.

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3 Responses to “Which is the better option in regards to reducing debt: debt consolidation or debt settlement (negotiation)?”

Hatlady Says:
January 8th, 2010 at 12:49 pm

Debt consolidation can be a trap if you use your home equity to pay off credit cards. That is one reason why so many homeowners are finding themselves in foreclosure these days.

Debt settlement is a better option for most people.

Both are equally effective – the question is what do they leave in their aftermath? Debt consolidation can be expensive and lead to a situation where your home is not worth what you owe on it. Debt settlement can leave you with less than perfect credit, but that can be fixed over time.

I would be more concerned about the “side-effects” of either situation.

heybulldog Says:
January 11th, 2010 at 2:41 pm

depends. If you can make the payments and have good enough credit You can consolidate all your debts into one. Pile cash on it till its gone. As long as you are making the min payment as agreed then Your credit will not take a beating.
It would be best just to list your debts smallest to largest and pay off the smallest first while making min payments on the rest. Then after you pay off the smallest take that money and pay the next smallest debt.
Most People will tell you to pay the highest interest first. Interest rate is not the problem. Its the spending. If you work from smallest to largest you will see progress faster which will keep you motivated to move on to the next.

If you cannot make the payments, thats when you have to go with a settlement. It will trash your credit.
I wouldnt use any company that you have to pay. Most if not all of these companies will not pay your creditors for months and then try and settle for less. No special skills. They just dont pay. Even the companies that have the word “Consolidation” in thier name.

Remember if you use a some company and they dont pay your creditors. You, and you alone will still be responsible for the debt. Your creditors will come after you and not the company you hired.

abby fth Says:
January 12th, 2010 at 11:00 pm

If a person has accumulated a large amount of credit card debt due to multiple credit cards, the need for a proper counseling for credit card debt consolidation can’t be understated. Credit card debt consolidation counseling helps a person get vital insights into the facts that can help him get control over the credit card debt.

Credit card debt consolidation counselors are experts with a good knowledge of debt management, budgeting and behavioral patterns of credit card holders. These services are vital for those struggling to manage their credit card debts. Also called credit counseling or debt counseling the credit card debt consolidation counseling brings immediate relief to a credit card holder.

A person seeking credit counseling can get it from two types of organizations. The professional or commercial organizations, and the non-profit organizations. As depicted by its name or categorization, the commercial organizations charge money for their credit counseling sessions and consolidation help on the other hand the non-profit organizations offer free of charge services. Just because the non-profit organizations are free, it doesn’t undermine their quality of service. The persons associated with such organizations are thorough experts and have lived the trauma of being under credit card debt themselves and hence bring their vital experience to the credit card holder. Read more from:

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