Debt Consolidation vs. Debt Settlement

What is Debt Consolidation?

Debt consolidation does not reduce what you owe. Instead, you will pay everything you owe with a new loan, thereby reducing your number of creditors.

A consolidation loan typically consists of one monthly payment to a debt consolidation company which in turn try to pay your creditors off with the monies received. Beware that many debt consolidations are not successful because the monthly payment is too low to actually pay your creditors the balance off in a given time period. Many clients come to our office after hiring a debt consolidation company and after many months of payments, clients typically still get sued by the creditors, have their wages garnished, and judgments obtained against them. Our debt consolidation lawyer in Queens can take a look at your situation and determine if this option will work for you. Call (718) 340-3385 to schedule your free initial consultation.

Is Debt Consolidation a Good Idea in NY?

Debt consolidation can be a good idea in New York if it helps you simplify your debt repayment and potentially lower your interest rates. However, it's essential to consider your specific financial situation and carefully evaluate the terms and conditions of any debt consolidation program or loan.

Here are a few factors to consider:

Lower interest rates: If you can consolidate your high-interest debts into a single loan with a lower interest rate, it may save you money in the long run.

Simplified payments: Consolidating multiple debts into a single monthly payment can make it easier to manage your finances and stay organized.

Potential credit impact: Debt consolidation itself does not directly harm your credit score, but it's important to make timely payments on the consolidated loan to maintain or improve your credit.

Eligibility and costs: Not all individuals may qualify for favorable debt consolidation options, and there may be associated fees or costs involved. It's important to compare different programs and lenders to find the best option for your needs.

Professional guidance: Consulting with a reputable credit counseling agency or a financial advisor can provide valuable insights and assist in making an informed decision.

Remember, debt consolidation is not a one-size-fits-all solution. It is recommended to consult with an attorney to get personalized help.

What Does Debt Settlement Mean?

While debt consolidation restructures your debt under a single creditor, debt settlement is a negotiated reduction of what you owe. When you hire our debt settlement lawyer in Queens, many creditors realize that if they do not settle with us, we may file bankruptcy for you and simply wipe the debt out. In many cases, creditors will only accept a settlement if you pay it in a lump sum (i.e. all at once). However, we may be able to negotiate a settlement plan and begin making modified monthly payments.

Debt settlement is typically only an option for unsecured debt, such as credit card debt and medical bills. It will appear on your credit report, but it will not have as much of an impact as bankruptcy. Creditors may be motivated to forgive a portion of what you owe if they believe bankruptcy is your only alternative. Our attorney can skillfully negotiate with your creditors on your behalf, utilizing his knowledge of their motivations to obtain the best possible arrangement for your situation.

Before moving forward, reach out to our Queens debt settlement lawyer first. During a free evaluation, we can discuss your situation in detail and determine if this option is best for you. Dial (718) 340-3385 to request an appointment.