Residents of Louisiana who are heavily in debt might want to consider their options for dealing with that debt. Although bankruptcy is often the ultimate solution, other avenues should be explored first. Two of them include debt settlement and debt consolidation.
Explaining debt settlement
Debt settlement is an option that can bring some relief when you owe a sizable debt. You can negotiate with creditors regarding your bankruptcy alone or through a debt settlement company to agree on an amount you could manage to pay back. Often, creditors are willing to forgive the interest on what you owe, which makes it easier for you to pay off your debt.
While this is often a good option for satisfying your debt, it carries risks such as your credit score taking a nosedive.
Understanding debt consolidation
Debt consolidation relies on taking out a new loan or line of credit to pay off your existing debt. This doesn’t help you to reduce your total amount of debt as you’re still required to pay it off. It allows you to lower your monthly payments and makes it easier to pay. Sometimes, the loan or line of credit taken to pay off your debt comes with a lower interest rate, which helps.
Another thing that makes it easier to pay back debts with debt consolidation is that all your debts can be combined into a single lump sum payment. This might help you to quickly satisfy your debt while improving your credit score. However, just like debt settlement, debt consolidation carries risks. For example, if you get a new credit card to pay off the debt from another, you run the risk of amassing new debt and could end up in a cycle.
Either of these options might be right for you. If you owe debt, determine which is more appropriate.