Should you get a debt consolidation loan to pay off credit cards or should you negotiate debt with your credit card company? What is the best way to pay of multiple credit cards? Is loan consolidation or debt settlement better for multiple credit card debts? If simplifying your multiple credit card payments is the goal, then a debt consolidation could be right for you. If you want to pay off multiple cards fast (1-3 years), then a debt settlement might be the best option. The best way to pay off multiple credit cards depends on your intended outcome.
What’s The Difference Between Debt Consolidation And Debt Settlement?
A credit card debt consolidation is the process of consolidating (or combining) all of your credit card debts into one larger lump sum. So, essentially, you are combining all of your credit card debt into a new loan. Credit card debt consolidation does not lower your overall debt. It simply puts all of your credit card debt in one place, which is different from a credit card debt settlement. Is debt consolidation a good idea? It can be if you get a lower interest rate for your new loan. Keep in mind, although the interest rate is lower, you will have to pay back the same overall debt amount as before – unlike a credit card debt settlement.
In a credit card debt settlement, a negotiation is made between the credit card borrower and the bank/lender that the total amount of the debt owed will be (usually greatly) reduced. Depending on the negotiation reached, the debt can be paid off in a reduced lump sum or over an extended period of time. The debt collectors like debt settlements because they would rather save costly attorney fees related to chasing down your credit card debt. Plus, lenders would rather receive some of the debt you owe them, than to have you declare bankruptcy and get nothing. There are pros and cons of debt settlement. Your credit score will have to take a dip, since you stop paying your credit cards for a period of time. This is so that your credit card accounts are considered “charged off” and this puts you in a place to negotiate a debt settlement. Once your debt settlement payments are complete, your credit score will begin to rise and your debt is gone relatively quickly.
Loan Consolidation Vs Debt Settlement: Which Is Better For Multiple Credit Card Debts
What is better debt consolidation or debt settlement for credit card debt? There are cons for debt consolidation, such on taking on a personal loan to pay off credit cards. If the goal is to pay off multiple credit cards fast, then a debt consolidation isn’t right for you. You will still have the same debt, but just consolidated into a new loan. Getting rid of your massive credit card debt is one of the fundamental pros of a debt settlement. With a debt settlement, there is a plan in place to completely get rid of your credit card debt. And if you have multiple credit cards with massive debt, then you can often reach a more favorable debt settlement.
Pay Off Multiple Credit Cards With Debt Settlement
If you are still wondering the difference between debt consolidation and debt settlement and which is better for you, then contact me for a free debt relief consultation at 844-729-4866. We will let you know your options for the best way to pay off multiple credit card debt, based on your unique situation. Be aware of debt settlement companies, as they are not held to the same ethical standards under the law as a debt settlement lawyer. You can get out of massive credit card debt, as you can see from my debt relief success story page. The savings we obtain far outweigh our attorney’s fees.
Jonathan B. Haskett is a debt attorney serving clients in California and focuses exclusively in debt relief. He is licensed to practice in California. Mr. Haskett owns and operates The Debt Settlement Lawyer in San Diego, and helps people with debt problems all over the country, if possible. For more information, please contact attorney Jonathan Haskett at 844-729-4866, or jonathan@thedebtsettlementlawyer.com. or use our online contact form.