What's the Difference Between Debt Consolidation and Debt Resolution?
Debt consolidation, debt resolution, debt relief, debt settlement—there are a lot of words thrown around about strategies to free yourself from your high-interest, unsecured debts. What are the similarities, and what are the differences between these terms?
Debt consolidation is the process of combining multiple debts into one loan, often at a lower interest rate and/or on a fixed repayment schedule. People often consolidate debts from credit cards, personal loans, payday loans, and medical bills.
Consolidation loans require you to make one monthly payment on your debts, rather than multiple payments across accounts. Paying equal installments on a fixed schedule makes budgeting more predictable and repaying your debt more manageable.
If you’re able to secure a lower interest rate on a consolidation loan than the ones you have on your other debts, you’ll end up saving money by consolidating. Plus, making monthly payments is a great way to show any lenders you want to borrow from in the future that you’re a reliable borrower.
Debt resolution, debt relief, and debt settlement are words used interchangeably to refer to the same process: you, or a company working on your behalf, negotiate with your creditors to lower your overall debt owed. As part of the negotiations, you make an agreement with your creditors to repay the remainder of the debt owed under a series of terms that may include a fixed repayment period.
Why should I work with a company to resolve my debts instead of doing it myself?
Trying to settle your debts by yourself is not for the faint of heart—that's why many people choose to work with companies that offer debt resolution services to work on their behalf.
One of the biggest benefits of working with a company (like JG Wentworth!) to settle your debts is that the company already has working relationships with major creditors.
Plus, the negotiators and specialists working on your accounts have a vast working knowledge of how the debt resolution process works, as well as the resources of an entire, trusted company behind them. They can help you create a repayment plan and answer any questions you might have about committing to debt resolution.
As with debt consolidation loans, debt resolution companies require you to make one monthly program payment, which you then use to pay the settled amount of your unsecured, enrolled debts.
How can JG Wentworth help?
- Gerson, E. S. (2019, November 25). What is debt consolidation? Experian. Retrieved from https://www.experian.com/blogs/ask-experian/what-is-debt-consolidation/