What You Should Choose? Debt Settlement Or Debt Consolidation

There are number of ways to reduce your debt burdens. Some are very useful without side effects but some have their own issues. Debt settlement and Debt Consolidation both can relief you from your debts headache. which is the best one? the decision is up to you.

Here only I can highlight The Pros and The Cons of both of them. The Choice and Final decision is always yours.

Debt Settlement

Pros :

Settlement deals with immediate removal of a portion of your total debts by your creditors. Then you can easily manage your remaining part of loans over your budget.

Through debt settlement, you can see that your credit score is improving gradually. The relief from high repayments produces good effect on your credit ratings. Now you have more money to settle down your outstanding bills and debts which surely help you in improving credit score.

Cons :

The Debt settlement is seem to be just like Foreclosure. It means your credit rating will be on or below the threshold of 500 points. although you will improve it gradually but it takes round about 2 years and in the mean time you have to work with Sub-Prime lenders.

Debt settlement also effects your tax consequences. According to IRS, you have to pay some extra state taxes.

Debt Consolidation

Pros :

With the help of consolidation, you can now repaying your debts at a lower interest rate than before. After choosing this solution, you have to pay less monthly loan repayments. which gives you more money to spare.

You can be out of your debts in less time frame than before. Debt Consolidation deals with some paperwork, cancellation fees and other accounts closure.

Cons :

Consolidation affects the credit score up to some extent. Lenders temporarily hold the credit extension until you will be regular in your repayments. In the same time, you have to present your accounts for inspection that your debt consolidation company dealing rightly.

Conclusion With Right Decision

None of them is a perfect solution of your debts. Each one has its own points and disadvantages. Debt settlement gives you instance relief but it is against your credit rating interest. On the other hand, Debt Consolidation gives sigh of relief at credit rating point but its a time taking process. So you have to pick the right option which suits you best.