Debt Consolidation or. the Debt Settlement Method: Which is the Better Option?
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Debt Consolidation or. The Debt Settlement Option: What is the Better Option?
Debt consolidation and debt settlement each have their pros as well as pros and. Which one is right for you will depend on the circumstances you face.
by Sean Pyles Senior Writer | Personal finance and debt Sean Pyles leads podcasting at NerdWallet as the host and producer of the NerdWallet’s “Smart Money” podcast. The show “Smart Money,” Sean talks with Nerds from the NerdWallet Content team to answer listeners’ personal finance questions. With a focus on shrewd and practical money tips, Sean provides real-world guidance that will help consumers improve their financial lives. In addition to answering listeners’ financial concerns on “Smart Money” Sean also interviews guests outside of NerdWallet and produces special segments to explore topics such as the racial gap in wealth and how to begin investing and the history of student loans.
Before Sean took over podcasting at NerdWallet the company, he also wrote about topics that dealt with consumer debt. His writing has been featured in USA Today, The New York Times as well as other publications. When he’s not writing about personal finance, Sean can be found digging around the garden, taking runs , and taking his dog on long walks. He lives within Ocean Shores, Washington.
Aug 5 2021
Edited by Kathy Hinson Lead Assigning Editor Personal finances, credit scoring managing money and debt Kathy Hinson leads the core personal finance team at NerdWallet. Previously, she spent 18 years working at The Oregonian in Portland in positions such as copy desk chief and team leader for design and editing. Prior experience includes writing copy as well as news editing at various Southern California newspapers, including the Los Angeles Times. She graduated with a bachelor’s in mass communications and journalism at the University of Iowa.
A majority of the items featured on this page come from our partners who compensate us. This impacts the types of products we feature as well as the place and way the product is featured on a page. However, this does not affect our assessments. Our views are our own. Here’s a list of and .
You’re trying to pay down . What is the best way to do it? as well as debt settlement?
They may sound similar, but they mean two very different things -and each can lead to more trouble for you.
It’s time to cut your debt
Register to join the link and track everything from cards to mortgages in one place.
Debt consolidation
In , several consumer debts are combined into a single new one. You can make use of a balance transfer credit card, home equity loan as well as a 401(k) loan.
What are the reasons to choose it:
For a lower interest rate than you’re paying now, which saves you money and can help you get rid of your debt faster
To reduce the amount of payments you’re making
If it’s a debt pay down is manageable in the debt is of a manageable size,
>> How to pay off your debt:
Debt settlement
is risky because you withhold payments from a creditor and then, when your account is in serious delinquency attempt to negotiate a lesser amount to pay off the credit.
But withholding payment trashes your credit score and exposes the possibility of being sued for payment. And there’s no assurance that the lender will agree to settle.
You may try hiring or trying an organization, but be cautious that this industry is full with unscrupulous players. The Federal Trade Commission recently ordered 11 such companies to halt their marketing, saying they stole tens of millions of dollars from consumers and gave them little benefit.
Why you might choose it:
Do this only if have an account that is long-delinquent, or is in trouble , and you think the creditor might be willing to accept a partial payment. You have little to lose since the damage is already done.
About the author: Sean Pyles is the executive producer and host on NerdWallet’s Smart Money podcast. His writing has been featured in The New York Times, USA Today and elsewhere.
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