What is the difference between debt settlement and debt consolidation?

Debt settlement and debt consolidation are two different forms of debt relief. The main difference is how they manage the debt. Debt settlement is an agreement between the creditor and the debtor to accept less than the full amount of the debt to settle the debt. This is done by the debtor making a lump sum payment to the creditor for a fraction of the total amount owed. The debt is then considered paid in full. Debt consolidation, on the other hand, is a way to combine several debts into one and to make a single, more easily managed payment each month. With debt consolidation, the total amount of the debt does not change. Instead, the interest rate is usually lower, and the payments are spread out over a longer period of time. In West Virginia, debt settlement is regulated by the West Virginia Consumer Credit and Protection Act. Debt consolidation in West Virginia is governed by the same law. Additionally, all debt consolidation firms must be licensed by the West Virginia Division of Financial Institutions. In conclusion, the primary difference between debt settlement and debt consolidation is that with debt settlement, a reduced amount of debt is accepted to settle the debt, whereas debt consolidation does not reduce the amount of debt owed, but instead offers a lower interest rate and more manageable payments.

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What is the difference between debt settlement and debt consolidation?

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