Have you reached a point where debt assistance is absolutely needed and options like debt consolidation or debt negotiation seems to be the way to go? Then, it is time to understand clearly the implications of both debt management programs in order to decide which one is best in your particular financial situation, there are advantages and disadvantages. However, it does not mean that one is better than other, as mentioned before, it depends on the one that meets better your needs.

Debt Consolidation

This is a very popular debt management and probably you know about it, but for better understanding let say that is the option that get all your current debt consolidated into a larger one, with a lower monthly payment, because of a lower interest rate.

If you are going with a debt consolidation loan, then a collateral could be needed, meaning your house or other assets you own. While this is far the cheapest option you need to be careful if you are turning unsecured debt into secured debt, for example your credit card debt and now a secured loan, as you can probably intuit, there are risks associated to this debt management plan in the event you were not able to pay the consolidation loan. However, the main advantage of debt consolidation program is that you rebuild your credit by paying on time.

Debt Negotiation

Also known as debt settlement does not involve a loan, debt counselor in your behalf negotiate a lower monthly payment with all your creditors, this programs has the advantage that you save thousands because your debt is reduced, and the span of time for becoming debt free is shorter than with debt consolidation, 12 up to 36 months. However, it has a disadvantage, you do not rebuild your credit history, but nothing that a good debt counselor couldn’t deal with.

As you can see, both programs are good alternative depending on your goals, specialized advise is recommended.