Debt Settlement or Debt Negotiation, What’s the Difference? – Carrie

“Dear Steve,

Hi. My husband and I just got married in October 2009. Our financial life together has been anything but a fairytale. I graduated from law school in May but have not yet passed the bar exam and have not been able to find employment in the legal field.

I just started working at a new job in the human service field. Prior to finding this job, I had been unable to find a job since graduating in May. During that time I was relying on credit cards. My husband works at a small business for his uncle.

He has worked there for 9 years and his uncle now wants to sell it to him. We have fallen behind on our credit card payments and have had our cable shut off because we were unable to pay the bill. I am worried that we will not be able to secure financing for the business due to our credit and my student loans. If we can’t buy the business it will be sold to someone else and my husband may be out of work. We are living paycheck to paycheck and are drowning in our debt.

I have been researching debt settlement and debt negotiation programs as a way of getting us out of debt. What is the difference between these programs and is one better than the other? How will each affect my credit? How will they affect our attempt to purchase the business? Thanks for your help.


Dear Carrie,

Debt settlement or debt negotiation, it’s the same thing. In most cases, including yours, it would make your life much worse. The advertisements for debt settlement make it sound like a magical solution and in your situation it is anything but that.

If you went with the debt settlement route it would make your credit worse, leave you getting sued and not resolve your debt. The key factor here is you are making it month to month with no big wad of cash to use to settle the debt right now.

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It seems you are faced with a couple of different issues, your personal finances and the business opportunity. For your personal situation the only solution that gives you and legal protection and rights with your creditors is going to be a bankruptcy. I urge you to click here to find a local bankruptcy attorney that you like, make a free appointment and go talk to them. We need to put an end to the past debt that is dragging you down.

As far as the business loan goes we are at the worst time in the past 30 years for anyone to get a business loan, even with perfect credit. Your uncle-in-law (I guess that’s right) might have grand dreams of finding a cash buyer but he needs to get real. If he was willing to sell the business and take monthly payments to buy him out over a period of time that might still allow your husband to buy the business and his boss exit.

Let the law protect you, face the situation head-on, deal with it, and move forward. Things will be better sooner that way.


You are not alone. I'm here to help. There is no need to suffer in silence. We can get through this. Tomorrow can be better than today. Don't give up.

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Damon Day - Pro Debt Coach

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Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.
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