Debt consolidation is taking on a new debt to pay off old ones. Debt negotiation is hoping to reduce a debt. Both are hugely expensive, generally unhelpful, and not recommended.
The Federal Trade Commission says that debt consolidation loans “require you to put up your home as collateral. If you can’t make the payments — or if your payments are late — you could lose your home. What’s more, the costs of consolidation loans can add up. In addition to interest on the loans, you may have to pay “points,” with one point equal to one percent of the amount you borrow.”
About debt negotiation programs, the FTC says that they “can be very risky, and have a long term negative impact on your credit report and, in turn, your ability to get credit.”
