Debt Consolidation vs. Debt Settlement

What is debt consolidation?

Debt consolidation or restructuring is the process by which debt management companies negotiate with creditors to reduce monthly payments, sometimes by as much as 50%. Debtors pay one monthly lower payment to the debt management company. Debt management companies can also help by:

• Paying each of the debtor's individual creditors
• Eliminate overdue bill notices
• Stopping collection calls
• Stopping foreclosure, repossession, legal action
• Stopping/lowering interest or other fee charges
• Providing debtor with the knowledge and skills to make better financial decisions.

What is debt settlement?

Debt settlement is an alternative to debt consolidation. Debt settlement is the process by which debt management companies negotiate on a debtor's behalf with contracted creditors the debtor designates. The end result being to reduce the amount the debtor owes to creditors. in most cases the savings are very significant, sometimes as much as 50%. Debtors make payments directly to creditors, based upon terms the debt management company negotiates on the debtor's behalf. Debt management companies can also help by:

• Stopping collection calls
• Stopping overdue bill notices
• Stopping foreclosure, repossession, legal action
• Stopping/lowering interest or other fee charges