Debt settlement is when you or a third party negotiates with your creditors to reduce what you owe them.It works very much like debt consolidation, but the company that makes the arrangements for the settlement does not ‘buy’ your debt, they simply negotiate better payment terms and then collect the money to split up between the creditors you owe. Some companies will offer both debt consolidation and debt settlement solutions, or a combination of the two.
Debt consolidation loans generally require collateral, but debt management services can often be obtained with little or no collateral at all. Your first step should be shopping around to find out what option is best for you. Use whoever can get you the best monthly payments or payment terms. It doesn’t even have to be the same company, depending on your situation and what your viable options are. Most debt settlement companies will provide more information and/or obligation-free applications online so you can compare savings quickly and easily.