What is the difference between debt settlement and debt consolidation?

Debt settlement and debt consolidation are two solutions to resolving debt, however they differ in a few key ways. Debt settlement is a legal process where creditors, such as debt collectors, are willing to accept a settlement amount that is lower than the full balance owed by the debtor. Washington law requires debt settlement companies to be licensed and bonded before entering into an agreement to settle or negotiate a debt. Debt consolidation is a process where the debtor takes out a new loan to pay off all of their existing debt and consolidate it into one loan. This can help reduce the interest rate and eliminate multiple payments every month. Borrowers also get the benefit of having a single payment and a set repayment schedule. Whether debt settlement or debt consolidation is a good option for a debtor typically depends on their individual situation and the amount of debt they are trying to resolve. Debt consolidation can be a better solution for those who are able to maintain regular payments on the loan, while debt settlement may be a better option if the debtor can’t keep up with the payments and is already at risk of defaulting on the debt. It’s important to note that both debt settlement and debt consolidation can have a negative impact on an individual’s credit rating and should be carefully considered before entering into any kind of agreement. It’s also important to consult with a financial advisor or lawyer to ensure that the individual is making the best decision for their unique situation.

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What is the difference between debt settlement and debt consolidation?

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