Finance Articles

If you are an individual who is having stressful nights and losing sleep due to your credit card debt, then logically you are contemplating all of your options on how to resolve this predicament. You might have spoken with numerous companies or spent tireless hours searching out the web to determine whether to go the avenue of credit card debt consolidation or debt settlement.

What it truly boils down to is the financial predicament that you are currently experiencing. If you don't have a particularly large sum of debt and aren't having a very complicated time paying it off then credit card debt consolidation may be a better fit for you. What the credit card debt consolidation organization will do is minimize the APR on your accounts, and institute a reasonable payment program in which the company will disperse the payments to the creditors for you. At the finish line of the road you will become free of your debts, however the process usually takes around five years and you must pay the whole original balance plus the predetermined interest rate. Nevertheless, you will become debt free.

Now will credit card debt consolidation be the right decision for everybody, absolutely not. You won't really experience too much of a reduction in the amount that you must put out each month. So for debtors who are really struggling to keep up or have fallen behind, credit card debt settlement may be a more sensible decision. The most viable candidate for debt settlement is somebody who is around $15,000 in debt or more and are having legitimate problems keeping up with the monthly minimum payments. Because debt settlement you will have a reduced amount you put out every month because you won't be repaying back the bill in its' entirety.

Basically the difference boils down to this, with credit card debt consolidation you pay back around 125% of what the balance currently is, which is a far cry away from the amount you would be obligated to pay through the minimum payment scheme. But it is also a far cry away from the amount you will pay back with debt settlement. With credit card debt consolidation it will also take you around five years to you will find yourself out of debt. Debt settlement should look to save somewhere like 40-50% of what you currently owe and be out of your debt situation in 2 years or less, depending on how fast you can set aside the cash it takes to make the settlement.

Steve Bis is a credit card debt analyst with the US Consumer Advocate, which practices in credit card debt reduction.