Debt Settlement Versus Debt Consolidation

If you are gradually being buried into an avalanche of debt and are finding it increasingly difficult to make those monthly payments, you have probably thought about going for debt settlement or debt consolidation services. Both can effectively eliminate or reduce your debt considerably. However, both methods of debt elimination will affect your credit ratings as well as your future financial status. Therefore it is imperative that you examine the pros and cons of both before committing to either. The best part about debt settlement is that a major chunk of your existing debt is written off immediately by the lender. This will provide you with instant financial relief and make the rest of your payments much easier, particularly if you are looking for unsecured consolidation loan for credit card. A debt consolidation program even enables you to start rebuilding your credit scores and get rid of huge debt burdens and the problem of late payments, penalties, etc. From now onwards you can focus on managing your finances and credit ratings better.

However, before you decide that debt settlement is the route to financial freedom, learn about the downside as well. The first thing that a debt settlement program will adversely affect is your credit rating. It is usually viewed as akin to foreclosure and pushes your score down to five hundred or maybe lower than that. And while it possible to improve your credit scores, you will not be given an opportunity to do so by any but sub-prime lenders. You will also have to face the consequences that accompany a financial write-off or a cash gift with free debt consolidation services. This means paying additional taxes to the Internal Revenue Service apart from state taxes, if applicable. So what are you waiting for get free debt consolidation quote now.
On the other hand, unsecured debt consolidation or free debt consolidation can also get and, what is more important, keep you out of debt. Here, it is the debt consolidation company that negotiates with your creditors and merges multiple loans into one easy-to-make monthly payment on easier terms than usual. Thus you can be debt-free in about five years. But the good news is that your credit scores will be less affected than if you were to opt for debt settlement. These are the pros and cons of both methods of debt elimination. Just choose one that gives you the maximum advantages, depending on your financial situation and plans for the future.