Debt Settlement vs. Debt Consolidation: A Full Guide
If you are a senior citizen and struggling with debt, PDS is here to help. For seniors, we understand that your days should be spent with family and friends, not stressing over how to pay off debt. That’s why our team is here to support all forms of debt relief for seniors. Get back to enjoying the life you deserve by contacting PDS today.
What is Debt Consolidation?
Debt consolidation consolidates all of your debt from multiple sources – whether that be credit card debt, medical debt, or even student debt – and aggregates it into one singular monthly payment. This tends to maintain and preserve one’s pre-existing credit scores.
Who is Debt Consolidation For?
Debt consolidation tends to be for individuals that can make their monthly payments and have a good to great credit score, but are looking for ways to simplify their array of payments.
What is Debt Settlement?
Debt settlement is the process of negotiating down an individual’s total debt into a lower payment. The short term effect is that this leads to payment defaults and a lower credit score.
Who is Debt Settlement For?
This option is best for individuals that cannot pay their monthly payments, have limited cash flow, and are looking for a financial reset. Additionally, debt settlement tends to be an ideal option for individuals that do not need to make any large, short-term purchases that are contingent upon a good or high credit score. Examples include, but are not limited to:
- Applying for a rental property or apartment
- Purchasing a home
- Purchasing a car or vehicle
Debt settlement companies work with both the individual in debt and banks to reduce the amount of debt owed over time.
Debt Settlement vs. Debt Consolidation: Associated Fees and Interest
Generically speaking, debt settlement plans take a larger percentage of interest – usually around 15-25% of the overall debt. Debt consolidation plans, meanwhile, usually take 5-10%
Debt Settlement vs. Debt Consolidation Risk and Impact
Whereas debt consolidation will not have a substantial short or long term impact on credit score, debt consolidation tends to have an impact on credit scores for upwards of 7 years.
Debt Settlement vs. Debt Consolidation: Which Do I Choose?
If you have good credit, steady cash flow, and are looking to combine or simplify your payments, consider debt settlement. If you have bad or poor credit, low cash flow, have no major upcoming purchases, and are behind on your monthly payments, consider debt consolidation
How PDS Can Help
No matter what stage you are in your debt journey, PDS can set you up for success by creating a personalized debt settlement plan that works for your specific situation. Contact us today to understand how our debt settlement and debt consolidation services can help you.
