Home > Settlement | Consolidation | Personal Loans

Settlement | Consolidation | Personal Loans

Connecting with companies who have the means and the resources to aid you in your debt dilemma is a better route to take versus having to run from your creditors (and lower your credit ranking), or, by barely making it month by month with minimal payments that do nothing to obliterate your debt.

Settlement (2)

Debt Settlement

In a settlement, a third-party-agency negotiates with a creditor on your behalf to allow you to pay a lump sum amount that is usually less than the original amount of money that you owe. A “settlement” is then done in order to resolve the debt. While feasible, the option of debt settlement may also pose a risk in affecting costing you more money than what you actually owed and may even potentially impact your credit score.

  • PROS:

  • Helps you resolve issues quickly with creditors

  • May cost more money than the amount you actually owe

  • CONS:

  • A quick but temporary solution to your debt issues

  • Some creditors might not be so optimistic about settling

Debt Consolidation

The process of consolidating debt is to take out a new loan to pay off several creditors or debts. In effect, several debts are collectively joined into one huge, single debt – and usually, for a more affordable payment scheme, or, with lower interest rates, and sometimes, both.

  • PROS:

  • Unsecured and does not need collateral

  • One lower monthly payment

  • Quick and easy

  • CONS:

  • May lower your credit score rating

  • Will accrue a higher interest rate of up to 15-20%

  • Longer payment terms

Portrait of a young adult working at home with a laptop
Young cheerful couple calculating savings for home investment

Personal Loans

A personal loan is money borrowed at a fixed rate and paid off at a specific payment schedule. This is usually done through banks, credit unions, or online lenders. Some personal loans need collateral or a down-payment before borrowing. Loans that need collateral or down-payment are called Secured Loans while those that don’t are called Unsecured Loans.
Generally, applying for a personal loan is a suitable option for clients with impeccable credit scores especially since most financial agencies base your approved loan according to your ratings. If you do decide to apply for a personal loan, be sure to consider the interest rate and the payment schemes available for you.

  • PROS:

  • Quicker method for paying off debts

  • Viable for short-term solution

  • CONS:

  • Long approval time

  • Does not address the underlying cause of debt

  • May result to higher interest rates