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Settling Debts as a SolutionSettling debts as a solution to financial problems often involves either debt consolidation or debt settlement. These two debt-relief methods are available for all consumers who face high-interest debt. Debt consolidation and debt settlement each offer different advantages to paying off debt. Debt consolidation is usually accomplished with an unsecured loan, which does not require any pledge of collateral as a repayment guarantee. Debt consolidation loans may be secured with a major asset, like a home mortgage, but this not recommended for the financially-undisciplined consumers. The biggest advantages of debt consolidation are convenience and low interest rates. Debt consolidation is more convenient because the consumer is only required to pay their debt consolidation lender every month. Debt consolidation loans usually carry lower interest rates than credit cards, which saves the consumer a lot of money over the repayment term. Debt settlement works with creditors to lower the total balance of debt they owe. With debt settlement, consumers can save thousands of dollars paying off their credit card debt. The advantage of debt settlement is obvious: the consumer pays less money to the credit card lender. With debt consolidation, the consumer must still pay back their entire debt, but they pay it back at a lower interest rate over a shorter period of time. The consumer must decide whether debt settlement or debt consolidation better suits their needs. Author bio: Brian Williams, a graduate of the University of Texas at Arlington, has 11 years’ experience writing and editing at daily newspapers in Texas. Having worked his way through college and experiencing the transition to professional life, Brian understands how credit affects people’s lives. Learn more from Brian about student loan debt and debt settlement through Credit Solutions. Credit Solutions is your alternative to debt consolidation.
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