A debt consolidation company is your mediator in collecting the money from you and spreading them with your creditors. Usually a debt consolidation company gets you lower rates and more agreeable terms.

The cons of this type of debt help is that you will need to cancel all your credit cards included in the plan. You also get charged with a month’s administration fees and first pay of the program.

Debt Negotiation

People who cannot pay monthly debt consolidation payments or who haven’t had a possibility to pay for past three months need the help of debt negotiation.

Debt negotiating company takes monthly pays from you and keeps it in either an account maintained by them or in your account itself. Meanwhile they are negotiating with your creditors to lower the pay-off rate to 40-50% of the total debt amount. When this issue is settled – the debt negotiation company pay your creditors on your behalf.

The con of this debt settlement method is that it lowers your credit score. However after your account paid in full – this clears negative status of your account.