Debt Consolidation vs Debt Settlement
Compare debt consolidation loans and debt settlement programs. Learn which option saves more money and protects your credit score.
Debt Consolidation
- Preserves your credit score
- Fixed monthly payment
- Clear payoff timeline
- Lower interest rate than credit cards
- No tax implications
- Must qualify based on credit
- Pay back 100% of debt
- May require collateral
- Fees may apply
People with good credit who want to simplify payments and save on interest
Debt Settlement
- Reduce total debt by 30-50%
- No credit score requirement
- Become debt-free faster
- One program payment
- Damages credit score
- Forgiven debt may be taxable
- Creditors may sue
- No guarantee of settlement
- Fees can be high
People experiencing financial hardship with $10,000+ in unsecured debt
Our Verdict
Choose debt consolidation if you have good credit and can afford payments. Choose debt settlement only if you're in financial hardship and can't afford your current payments.
Not sure which is right for you?
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