The first step you are going to need to take whether you are going to do a debt consolidation or debt settlement is to determine how much unsecured debt you have in order to do a debt consolidation comparison. If you are unsure, contact a credit monitoring company like Experian or MyFICO and obtain a copy of your credit history.



The next step in the debt consolidation comparison is to find out if you qualify for a debt consolidation loan. In most cases, you will need to own your home to qualify for a debt consolidation loan. Debt consolidation is a home equity loan and will make your mortgage payments higher. You will also have to show a minimum FICO score, minimum monthly income and steady employment.

Make sure you are going to save money with a debt consolidation loan or if you would save more money paying your credit card's minimum payments. You will need to also need to decide if you can afford higher monthly mortgage payments. If you can't afford higher mortgage payments, a debt consolidation loan probably isn't the best solution for your situation.

A debt consolidation comparison shows that you can lower your monthly payments and reduce the interest rates of your unsecured debt. You only have to make one payment and you can write off the interest payments on your taxes. The negative side is that it will take you longer to pay your bills off and you will spend more money in interest over the life of the loan. You could also lose your home if you can't make the payments on your debt consolidation loan.

If you are looking at debt settlement to eliminate your debt, most companies offering debt settlement will only work with people who own $7,500 or more. These companies can also have additional requirements, so make sure you meet all the requirements.

In a debt consolidation comparison, you will need to determine if you have the money available for debt settlement. To find out if debt settlement is right for you, add all your monthly expenses including housing, transportation, utilities, food, entertainment and insurance and then subtract that amount from your monthly income. If you have money left over, then debt settlement may be the right option for you.

After doing your debt consolidation comparison you decide that debt settlement is the best option for you, don't sign up with the first company that you find. Investigate several companies prior to signing up with anyone and also make sure they are approved by the Better Business Bureau.

A debt consolidation comparison shows that using debt settlement to get out of debt can reduce the total amount you owe and could also improve the relationship between you and your creditors. With debt settlement, you can pay your debt quicker as long as you remain faithful to the settlement offer that will be established for your particular situation. You need to be aware that debt settlement can incur potential tax problems and may hurt your credit rating. Unfortunately, debt settlement could encourage your creditors to initiate law suits against you.

To summarize the debt consolidation comparison basics between debt consolidation and debt settlement are:

• Compare the short-term benefits of each debt solution option

• Compare the long-term benefits of each debt solution option

• Decide which option is best for you. Which option do you qualify for and which one offers the best overall benefits? Which one can you afford?