Once you know your goals and your options, as you try to become debt free, you need to decide what is the best option for you.

It is very important for you to understand the difference between:
1. Debt consolidation
2. Debt negotiation and debt settlement

Both debt consolidation and debt settlement have their advantages and disadvantages. Before you enter into a debt help program you must clearly understand what you are getting into and how it operates.

We have listed the advantages of debt consolidation on this page.

Compared to debt consolidation, debt settlement might seem more beneficial to you. In case of debt settlement you are actually negotiating with the creditors to give up a part of the money that they had lent to you and write it off as bad debt.

Suppose Sam borrowed $1000 from Katie. When Katie wants the money back, Sam says to Katie, "Hey listen I can give you back $400 if you forget about the rest of $600". Some times the creditors might listen to such an idea since it takes them a lot of time and effort to recover the $600 and it may cost them more then $600 in their time and effort to recover the $600.

Although this might seem like a dream come true to a lot of us, but it has potential disadvantages associated with it:

1. It will show in your credit report for the next 7 years and beside the debt it would be listed that you "negotiated and settled" the debt.
   
   
2. Although this is a better option than having an outstanding debt amount in your credit report, in a way it is derogative. It will still send a signal to any future creditor that you have not paid back the total principal amount in the past.

So when should you go for debt consolidation and when should you go for debt settlement:

1. Consumers having outstanding balance with more than one creditor can potentially benefit from debt consolidation.
   
2. If you feel your debts are too high and there is no way you can ever repay those debts and will end up going in bankruptcy, in such cases debt settlement is the right choice for you.
   

__________________________________________________________________________

Mangement and Settlement

• Bad Debts
  
  
• Come down on credit card debt
  
  
• Debt Consolidation Loan
  
  
• Debt consolidation services can make you debt free
  
  
• Debt Help
  
  
• Debt Problems
  
  
• Debt Settlement
  
  
• Is debt consolidation the right solution for you ?
  
  
• Multiple debt settlement plans
  
  
• Online Debt Consolidator
  
  
• Overview - Get a complete picture