Climbing out of a financial hole is always one of the hardest things one can do in their financial journey. Owing money to a bunch of creditors is no fun, indeed.
In this article, we’ll help you deal with your debt by introducing you to debt-paying strategies, debt settlement, and debt consolidation. We’ll also look at the debate of debt consolidation vs debt settlement to help you figure out which one is right for you.
Debt Settlement
The first strategy of dealing with debt is known as debt settlement. The way debt settlement works is fairly straightforward. You begin conversations directly with each creditor. The goal of these conversations is to negotiate a smaller settlement with your creditor than what you originally owed them.
For instance, if you are in debt to a creditor for $10,000 and you’re over 6 months due, you can always negotiate with that creditor to pay off a portion of that debt and call it done. There are several reasons why a creditor may be open to negotiations.
Firstly, they may just really need the money. There’s no way for them to force you to give it to them except via a collections agency. That not only takes time, but the collections agency will also charge a fee. Thus, it may be in the creditor’s best interest to just negotiate with you so that you give them a lump sum that’s a portion of the debt, and the two of you just call it quits at that point.
However, debt settlement isn’t a reliable strategy. The creditor may, of course, refuse to negotiate with you, which would leave you between a rock and a hard place as your credit score is absolutely ruined.
Debt Consolidation
Another strategy to deal with debt is known as debt consolidation. This is particularly applicable to you if you have several debts spread across a few different creditors. With debt consolidation, a debt consolidation agency buys all those debts so that you now owe a single sum to the debt consolidation agency.
In addition, this sum can often be financed at a lower interest rate than those debts you previously had. This is obviously to your benefit, as you will end up parting with less money out of your pocket as you pay the sum back. You also need to interact with only one creditor.
People ask if debt consolidation agencies, like Debthunch, are legit. But to answer the question, “is Debthunch legit?”, one needs only to look at the myriad of happy customers that have used their services to climb out of a financial hole.
Debt Consolidation vs Debt Settlement, Explained
There you have it — now that you know the difference between debt consolidation vs debt settlement, you’re all ready to pick which of these two strategies you’ll be leveraging to deal with your own debt.
Climbing out of a financial hole is never a fun place to be. But when you get on the other side of this experience, you’ll be far more financially savvy and ready to ensure that getting into such debt never happens again.
For more financial advice, be sure to check out the rest of the articles on the website!
