Debt Settlement Versus Other Forms of Debt Relief

If you are overwhelmed by debt, then you want to know your options. Debt consolidation, bankruptcy and credit counseling are common forms of debt help, but where does debt settlement fit in? Unlike the other debt programs, debt settlement seeks to quickly eliminate credit card debt by dealing directly with your creditors.

Debt Settlement Versus Debt Consolidation

Debt settlement differs from debt consolidation in two primary ways. First, debt consolidation works to combine your debts under a lower interest rate. A lower interest rate can save you money if you don’t extend the length of time you repay the debt. However, debt settlement reduces the total balance of your credit card debt, not just the interest rate.

Another difference is credit requirements. If you have good credit, then you may be able to obtain a debt consolidation loan that benefits you because the interest rate is very low. However, bad credit can negate any potential benefits of acquiring a new loan. Debt settlement works well for consumers with bad credit because it doesn’t require a new loan or credit checks.

Debt Settlement Versus Bankruptcy

Bankruptcy is the last word you want to hear when it comes to your finances. The option to legally declare insolvency is feared for good reason. A bankruptcy will stay on your credit report for seven to 10 years and probably prevent you from obtaining any form of credit during that time.

Debt settlement, on the other hand, is a program that formulates a plan to eliminate credit card debt typically within 36 months. Therefore, you quickly resolve credit card debt and can move on with your financial life. Your credit report may not be unscathed, but bankruptcy is drastically more detrimental to your credit than debt settlement.

Debt Settlement Versus Credit Counseling

Credit counseling supplies you with tips and suggestions to help alleviate your debt. It may also formulate a plan to repay your debts, but credit counselors normally only give advice and do not help with the implementation of the plan. Debt settlement also provides you with a plan to eradicate debt, but debt settlement works with you to accomplish those goals. Debt settlement professionals act on your behalf to work with creditors and take collection calls.

Debt settlement is a unique form of debt relief that doesn’t combine your debt, obliterate your credit report, or help from a distance. Debt settlement mediates directly between you and your creditors to reduce the total balance of your credit card debt including principal balance, fees, and interest.

Author Bio: Scott Sumerford has several years of experience working in the financial industry and has written a myriad of articles on various financial matters. Read more about how MyUSADebt offers a viable alternative to debt consolidation.