There are pros and cons of debt settlement and debt consolidation. Services offered by the respective companies can differ from one to the next. So check them out thoroughly. Ultimately, the solution you choose depends on your situation.
With debt settlement, only part of the debt is paid to the creditor. A deal is settled with the creditor for a lump sum amount. Principal amounts can be reduced significantly and interest rates are lowered. Your total debt can be reduced by 50% (or 60% in rare cases). Timing can be important as well. If you know something needs to be done, then do it sooner rather than later. The bad news is that your credit score is negatively affected and there could be tax consequences from settling debt for less than you owe.
With debt consolidation you still owe the entire amount of the debt but your unsecured debts are combined into one loan and you get one payment instead of multiple payments. Some debt consolidation companies can work to get interest waived on your behalf as well. There is a positive affect on your credit score.
Nothing is free, and everything comes with a price. Debt settlement and debt consolidation companies are no different, they both charge monthly fees. Those fees can vary from 10% to 22%.
More and more people are over their heads in debt these days. Consequently many debt solution companies have sprung up to “help" those in debt. Unfortunately some are scams so make sure you find a reputable company to deal with.
Find more on debt consolidation , debt settlement , and other debt solutions at debt solution strategies.