Debt settlement may be the fastest and least expensive way to get out of debt without filing bankruptcy. During a debt settlement program, professional debt-negotiators work with your creditors to reduce your debt to a fraction of what you owe. This is intended to save you thousands and gets you out of debt in a fraction of the time it would take to pay off the debt normally. While you can certainly try and settle your own debts, many people find it daunting and prefer a company that is more familiar with deals that may be possible, especially where some creditors may be more willing to settle at a better rate if they settle a lump set of debts belonging to numerous consumers at once. It saves them resources (time and money) in working with debt settlement companies that can try settling batches of debt at the same time.

Services generally maintain close relationships with credit card companies and other lenders. In some cases they are able to negotiate lower interest rates for their clients which will reduce payments to a certain extent. Total original debt is paid back to lenders.

A loan combines all of your existing payments into one new monthly payment. In some cases the overall interest rates may be reduced but you often end up with a longer payment term than you had to begin with. Your total original debt is paid back to lenders.

Credit card companies make more money the longer you stay in debt. The minimum monthly payments they charge usually cover little more than interest charges. As a result consumers enter a cycle of minimum payment amounting to an average $10,000 balance on a typical credit card.