Debt Settlement vs Debt Consolidation Is There A Difference?
Debt settlement and debt consolidation are not the same thing. While they both help reduce your debt, they each affect your credit score and pocketbook differently. Before signing up with any debt management company, make sure you understand the pros and cons of their approach. And of course, be a smart shopper before signing any contract.
Debt Settlement Instantly Eliminate Debt At A Cost
A debt settlement company gets your creditors to wipe out part of your debt immediately. Fearful that you may go into bankruptcy and that they wont see any money, creditors will reduce your debt. With smaller payments, you can more easily wipe out your principal.
But with debt settlement, your credit will be in poor shape for a couple of years. Debt settlement is treated like a foreclosure or bankruptcy by lenders. So it will be difficult to get decent credit, at least for two years. You will also have a tax liability with the eliminated amount.
Debt Consolidation A Slow Approach To Debt Relief
Debt consolidation companies handle your creditors and payments. You send them one payment,...