Debt consolidation and debt settlement can be confusing because they are all meant to reprieve consumers struggling with debts. They are viable alternatives that you need to try out before filing for bankruptcy. They can help you get out of a debt situation if followed correctly.
Debt settlement involves negotiating with creditors to allow for the settlement of a debt at a lesser amount in a case of substantial debt. In contrast, debt consolidation rolls high interest-earning debts into a single payment and interest rate. The two methods seek to lessen the struggles of paying debts.
Both debt consolidation and debt settlement may combine debts from several creditors. A lump sum is then paid in debt settlement while it becomes easier for the debtor to focus on making monthly payments at lower interest rates in the consolidation plan. Note that debt consolidation is good in a case where you have debts with different creditors, who charge different interest rates and varying due dates. It makes it difficult for the debtor to pay the debts. Read on to see the difference between them to help you compare the top debt relief companies.