Debt consolidation loans transfer debt from one place to another. While this may sound good, since many times it can appear to lower your monthly payments.

But debt consolidation doesn’t reduce your debt; it merely eliminates multiple high interest rates associated with debt from various lenders. A debt consolidation loan is one viable solution to consolidating your debt. In this situation, you basically get a loan to pay off all your various debt or get a better type of loan.

Debt settlement is the process in which you stop paying your creditors for some time and save that money so that you can then negotiate with them to settle the debt for a lesser amount.