Credit card debt consolidation and debt settlement programs are two options for consumers seeking debt relief. So what option makes more sense for your financial situation?Credit card debt consolidation allows consumers and small businesses to trade their high interest unsecured debt and for a low interest secured loan. Typically the consolidation company will pay off all your high interest credit cards and allow you to pay them back at a lower interest rate but you will have to secure the new loan with a secured asset. Most of the time this will be your house or other large asset. So why’ll consolidation loans are great for paying back debt more efficiently, it also carries with it a significant risk of losing your house.Debt settlement programs are another option for consumers and small businesses in need of debt relief. Debt settlement is intended for those who are experiencing a financial hardship and are struggling to pay their credit card debts. Those who qualify can typically eliminate 40-60% of their unsecured credit bills while avoiding bankruptcy. This however will have a negative impact on your credit rating, at least in the short term, and is only intended for individuals that are going through financial hardship.New federal laws were recently passed by the Federal Trade Commission which make debt settlement a much better deal for consumers. These new laws ban debt relief companies from collecting upfront fees and therefore the risk of being ripped off has been eliminated. If they don’t perform and eliminate at least 35% of your unsecured credit card bills, you don’t pay a single penny.
