When confronted with bad credit problem, some credit counselors recommend a debt settlement. How does it work? A debt settlement is a negotiation between the borrower and his creditor in order to come up with a different payment term.

Competition between debt consolidation companies and debt settlement companies has always been close. While many people consolidate debts, most consumers prefer a debt settlement to solve their debt problems. What is the difference between these two debt solutions?

If you are suffering from a large debt, your main priority should be to work via a consolidation service to get the best possible debt settlement. A debt settlement will permit you to pay off creditors with cash you obtain in one large disbursement while at the same time salvaging your credit rating.