Debt Consolidation and Debt Consolidation Loans
Debt consolidation agencies also negotiate with your creditors but generally have agreements made with credit card providers and loan lenders, so the process is a lot simpler. Once you contact a debt consolidation agency, just by seeing who you owe money to, they can tell you to what extent your debt can be reduced. Usually, in order for the lenders and financial institutions to agree to debt reductions, they commit to take care of payments themselves. So, each month you’ll pay a lump sum to the debt consolidation agency and they’ll take care of the rest.
Debt settlement has two possible meanings: It can refer, as debt negotiation, to the process of agreeing with creditors new repayment programs or it can imply some sort of legal settlement. This means that if to some extent your debt problem has become a legal problem, a debt settlement company (usually a law firm or a company with expert lawyers) will be able to reach an agreement with the creditors and take your debt problem out of courts.