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Should I Do Debt Consolidation or Debt Settlement? – Jimi


“Dear Steve,

I am $60,000 in credit card debt. The banks have lowered all my limits and raised all my interest rates astronomically.

Is it better for my future credit to do Debt Consolidation or Debt Settlement? Thanks!


Dear Jimi,

A debt consolidation could be refinancing the home mortgage to take cash out and pay off debt or it could be a debt management plan. Some people use the term debt consolidation interchangeably.

Debt settlement comes in two flavors as well. There is a monthly payment approach or the lump sum debt settlement approach. I favor the lump-sum debt settlement approach out of the two options.

In your situation you have not indicated that you are in financial trouble, just unhappy that your limits have been lowered and rates increased, which is legal for the banks to do. Many people fail to understand that the credit card remains in your pocket at the whim of the bank. You have no ownership over the card.

If you simply want to get out of debt in an organized way, try the debt snowball approach. Click the link for a detailed description of the debt snowball technique.


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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About the author

Steve Rhode

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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