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What is the Difference between Debt
Consolidation and Debt Settlement?
Typically, debt consolidation is in the form of a
debt consolidation loan. This loan is usually at a lower interest
rate than your current debt and therefore can save hundreds of
dollars in interest. You will use this type of loan to pay off your
higher interest credit cards, student loans and other high-cost
debt.
But this isn't the only way that you can go when
you're getting back on track with your finances. The other option is
called debt settlement.
Debt Settlement
For those who don't qualify for a lower interest
debt consolidation loan or are severely in debt, debt settlement may
be a good solution. This approach to credit repair allows you to
make one payment per month that is typically lower than your current
payment. You also have an expected timeline for when your debt will
be completely eliminated.
Credit Counseling Options
One more choice that will help lower monthly
payments is credit counseling. If you don't qualify for a debt
consolidation loan, this can help make your monthly payments more
manageable and keep you on budget.
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