As a result of late payments, many people find themselves sunk in credit card debt with no way out. Credit card companies are great at getting customers, but once you fall behind, they make it nearly impossible to climb out. Between fees, charges & piling interest, the matter seems to be getting worse.

Very few individuals appropriately calculate and prepare for interest rates and fees that accompany their traditional spending. As a result, high interest rates can help force an individual into unplanned debt faster than they would think possible, leaving the individual feeling lost, alone and helpless.

If you have a low FICO score, you face difficulty in getting credit or purchasing or renting a property. This is because any lender would run a check on your FICO score, which a sign of your credit worthiness. It is easy to comprehend that a low FICO score is an indication of low credit worthiness.

Debt Settlement vs. Debt Consolidation

If you are one of the many Americans suffering from debt problems, there are solutions out there, and DebtConsolidation.net wants to be part of your solution. Two of the most popular and most feasible debt relief options are debt settlement and debt consolidation. These financial relief programs are the best alternatives to bankruptcy. Both of these options can get you to your ultimate goal of being debt free, but each debt solution has it's own set of steps and consequences.

In order to make an intelligent, educated decision, you need to assess your current financial situation. Your personal financial standing, in addition to your financial goals and capabilities, will dictate which debt relief measure you choose. To further help you find the right debt solution measure, here is a pros and cons list for both debt settlement and debt consolidation.

: :   PROS   : :		: :   CONS   : :
Debt Settlement Pros Debt settlement clears a varying degree of your current debt, usually between 30-50%. This gives the indebted person immediate financial relief. Because of this, your monthly payments will shrink and become more manageable. Once your debt is more manageable, you can better control not only your personal debt but also your credit score and overall financial standing.		Debt Settlement Cons Debt settlement immediately impacts your credit score negatively. If you choose this debt relief option, make sure you accept the fact that your credit score will plummet. This will force you into working with sub-prime lending institutions and force you to accept higher future interest rates. In addition to dealing with all the negatives of having a low credit score, there may also be tax implications depending on the state you live in. Debt settlement can be seen by the Internal Revenue Service as a monetary gift that you may have to claim.
Debt Consolidation Pros Debt consolidation greatly simplifies your debt repayment by consolidating all of your debt into one low interest debt. Your debt consolidation company will negotiate lower interest rates with your creditors to make your debt reimbursement easier. These interest rate savings are tax deductible. You simply make one monthly payment to your debt consolidation advisor and they carry out the process from there. These debt relief companies will also take care of any other miscellaneous problems like closing accounts and canceling fees. Debt consolidation can take a great deal of financial stress away from a debtor because they don't have to deal with several creditors and monthly payments. Debt consolidation can generally get you out of your debt in as short as five years.		Debt Consolidation Cons The only con associated with debt consolidation is that it can sometimes negatively impact your credit score. However, it is worth noting that this impact is far less than the effect debt settlement has on your credit score. In addition, debt consolidation will take longer than debt settlement.