Thousands of clients ask us every month whether they should resort to debt settlement services or apply for a debt consolidation loan in order to solve their debt problems. Truth is that settlement services are usually the most appropriate solution and only in certain circumstances consolidation loans are a viable option. From all the inquiries we receive every month, 95% need to resort to settlement services and can make little use of a debt consolidation loan.The reason for this is simple: When people realize that their debt situation needs to be addressed urgently, it is too late for consolidating through a loan. Consolidation loans are best used when your credit score makes it still viable to get approved for a competitive loan. Otherwise, if you have already defaulted or missed payments on loans and bills, debt negotiation and settlement services are the only choice if you want to avoid other critical solutions like bankruptcy.Debt Consolidation Loans’ ViabilityA loan works smoothly when you are current with your outstanding debt. Then, you take out a loan and use the money to repay your debt obtaining a lower rate, a longer repayment program and thus, lower monthly payments. This can imply either savings on interests in the long run, savings on the installments on a monthly basis (more affordable monthly payments) or both.Yet, there are no direct debt reductions and usually, if you choose a longer repayment program to reduce your monthly payments, you will actually end up paying more on the long run. Moreover, only if your credit history is clean (all your debts are current) you will be able to obtain a lower interest rate to compensate at least a bit for the extension of the repayment program which would otherwise generate more debt in terms of interests.Debt Settlement Advantages Over ConsolidationWith settlement you obtain an actual debt reduction. Through negotiations with your creditors, debt settlement agents can obtain new terms on your debt. Successful consumer debt and personal loan settlements can obtain reductions of up to 60% on your debt and debt payments. Even if you cannot get such high debt cuts, you can still obtain lower and more affordable monthly payments by getting longer repayment programs from your creditors.Moreover, if your current financial situation is complicated, settlement agents can agree with your creditors new grace periods for you to recover and retake payment of your debt once your situation has improved. These agents are expert negotiators and will find along with your creditors a solution that both can benefit from. The key to this is the fact that if no solution is found, you may have to file for bankruptcy and that will not be advantageous neither for you or your creditor.Eventually, after debt settlement, your credit score will begin to improve and you will be able to qualify for a consolidation loan. But if your credit is already ruined, a direct consolidation loan is not the solution. Instead, hire debt settlement services to manage your debt and improve your credit and later on, you will be able to consolidate and become debt free again.