Given the fact that the level of debt has significantly increased in recent times, this has meant that certain services that were available but which enjoyed relative anonymity have now become essential and sovereign companies in their own right. As a consequence, terms such as debt consolidation, debt settlement, bankruptcy proceedings, insolvency and liquidation which were all reserved solely for the legal profession have now entered into common parlance. Such is the curious quirks of economic turmoil: it certainly makes for some strange bedfellows!
Some have contested that the difference between debt consolidation and debt settlement companies is a moot point; an entirely academic and superfluous issue that does not merit much consideration or time devoted to it. In reality, these two different types of solutions to dealing with debt are very different creatures indeed, and so it is only by and with a respectable degree of understanding for each that the consumer can make an appropriate decision as to which of the two is the right one for them.
With that in mind then, just what is the difference between debt consolidation and debt settlement?
Debt settlement service providers
Primarily designed to cater to those debtors who have large amounts of personal, unsecured debt that they are currently struggling to deal with appropriately and efficiently on their own, the typical debt settlement company acts as a makeshift mediator between the parties to a debt.
The reason that debt settlement groups will intervene in a dispute between both debtor and creditor ("24Biz Company") is on the basis that they will be hopefully able to reach a repayment schedule which is acceptable to both parties. Therefore, the terms of repayment as well as the amount that is required to be paid by the debtor will be variable; dependent upon the wishes expressed by the creditor.
Debt consolidation service providers
The rationale behind the usage of a debt consolidation service provider is that the debtor will be able to have all the money that they currently owe to creditors aggregated into one convenient monthly expense. This monthly deduction will be set at a figure that the debtor is actually able to realistically pay and so the difference between the consolidation and settlement approach is that with consolidation, there is more consideration given for the resources of the debtor.
Another attractive feature of debt consolidation is that the rate of interest owed by the debtor can be reduced.