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
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/relief/settlement
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?
JG Wentworth offers debt resolution services directly and can also connect you with companies that offer debt consolidation loans. Deciding which is right for you depends on your personal circumstances.
For both services, consumers see the most success when they are both fully committed to repaying their debts and have a steady source of income to make either their monthly loan payments or their monthly program payments.
If you’re interested in our Debt Resolution Program, give us a call today at (888) 505-1794. One of our Debt Specialists can help you understand how the program works so that you can decide whether debt resolution is right for you.*
To explore your debt consolidation loan options, you can use our online tool to get quoted for a loan that meets your needs.**
Sources cited
- Gerson, E. S. (2019, November 25). What is debt consolidation? Experian. Retrieved from https://www.experian.com/blogs/ask-experian/what-is-debt-consolidation/
*The JG Wentworth debt resolution program is provided by JGW Debt Settlement, LLC. JGW Debt Settlement, LLC is licensed/registered to provide debt settlement services in states where licensing/registration is required. JGW Debt Settlement, LLC operates in the following states: AL, AK, AZ, AR, CA, CO, FL, ID, IN, IA, KY, LA, MD, MA, MI, MS, MO, MT, NE, NM, NY, NC, OK, PA, SD, TN, TX, UT, VA, DC, and WI. If a consumer in CT, GA, HI, IL, KA, ME, NH, NJ, OH, RI, SC and VT contacts us we may connect them with a law firm that provides debt resolution services in their state. Debt relief program results will vary by individual situation. As such, it may not be suitable for all persons. JG Wentworth does not offer debt relief services in all states and fees may vary from state to state. Not all debts are eligible for enrollment. Not all individuals who enroll complete our program for various reasons, including their ability to save sufficient funds. Savings resulting from successful negotiations may result in tax consequences, please consult with a tax professional regarding these consequences. The use of debt relief services can potentially have an adverse impact on your credit rating, may result in you being subject to collections, and may result in other adverse action by creditors or collection agencies. Read and understand the program contract prior to enrollment. JG Wentworth does not pay or assume any debts or provide legal, financial or tax advice or credit repair services. You should consult with independent professionals for such advice or services. Please consult with a bankruptcy attorney for more information on bankruptcy.
**JGW Debt Settlement, LLC d/b/a JG Wentworth ("JG Wentworth") has partnered with Even Financial, Inc to provide this loan referral service. JG Wentworth is not a lender and cannot ultimately decide whether or not you are approved for a loan. JG Wentworth does not determine or influence the amount of money you may receive from using this referral services.