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Difference between debt consol and settlement?

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I'm in the typical falling behind pickle. I'm about 30-60 days behind on all my 6 credit cards, and 5 personal loans. plus i'm 40 days down on my car loan. I also have 5 PDLs out as well! I need to do something fast here...I dont want to go the BK route (did a chapter 7 6 years ago)...Question: is what is the difference betweeen debt consolidation vs. settlement? which is better? which ruins my credit more? Any help would be greatly appreciated. I dont sleep at night, and I'm looking for a 2nd job now...thanks!

consolidation is where you pay on all your debts via one payment, this is generally through a debt consolidation company or you get a debt consolidation loan.

Settlement is when your accounts are turned over to collection agencies, or your debt is bought (for pennies on the dollar) when that happens, these places often offer to settle your account for typically less than the amount due.

PDL's - what state are you in? how much have you paid back on your PDL? and how much did you originally take out?

Sub: #1 posted on Fri, 04/13/2007 - 23:06

sswett sswett

(Posts: 408 | Credits: 50.51)

Consolidation looks better over settlement when it's reported in the credit file. Look into your financial situation and figure out how much you can afford to pay every month. If you can manage with the plan set in consolidation, go with it. Payments set in the settlement plan are much lower.

Your accounts will remain current in the consolidation program. You will pay the principal amount and the interest rates will be lowered down with your creditors. Besides, most of the fees will be waived off to bring down the total balance.

If you go the settlement route, your accounts must have to be in defaults for a certain period of time. This is to prove your financial hardships to the creditors and get the accounts settled by a lower pay off. Creditors will report your accounts to the bureaus with "Settled" status but you can negotiate with them for a fair reporting. ml

Sub: #2 posted on Sat, 04/14/2007 - 02:32

weeswie weeswie

(Posts: 382 | Credits: 57.82)

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