Question by Roderick C: Which is the better option in regards to reducing debt: debt consolidation or debt settlement (negotiation)?
There has been considerable debate between two specific debt reducing options: debt consolidation and debt settlement (negotiation). I’m trying to decide which is the best option to select if one wants to reduce their financial debt (specifically credit card debt). I’m sure there’s pros and cons to both options, however which is more effective? Please advise.
Best answer:
Answer by Hatlady
Debt consolidation can be a trap if you use your home equity to pay off credit cards. That is one reason why so many homeowners are finding themselves in foreclosure these days.
Debt settlement is a better option for most people.
Both are equally effective – the question is what do they leave in their aftermath? Debt consolidation can be expensive and lead to a situation where your home is not worth what you owe on it. Debt settlement can leave you with less than perfect credit, but that can be fixed over time.
I would be more concerned about the “side-effects” of either situation.
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“debt negotiation settlement”
Steampunk Civil War — Harper’s weekly Jan 26, 1861
Image by CoastConFan
View of Ft. Sumter in Charleston harbor, looking east to west. The siege is lifted with arrival of aerial and undersurface relief fleet. South Carolina is in tense negotiations with the Union about the status of the Charleston harbor forts and other Union facilities by Governor Pickens, who has offered a monetary settlement for assets and debts of ex-Union possessions. Negotiations are further clouded by other states leaving the Union. The Republic of Texas has pledged to support secessionists.
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