Debt settlement involves negotiating with the credit card companies to reduce the total amount of debt that you owe. It is a fairly aggressive approach to credit card debt relief, with some of the advantages being that most consumers are able to significantly lower the amount they owe and, instead of taking up to 20 years or more to pay off the balance, through a debt settlement program they can become free from credit card debt in 2 to 4 years.
Credit counseling involves working with the credit card companies to lower the interest being charged. With consumer credit counseling a consumer can be debt free in 4 to 5 years and able to save some money on their high interest credit cards. Realize, however, that these companies are usually set up by the credit card companies in order to collect as much of the debt as possible.
Debt Consolidation involves taking out one loan to pay off multiple debts. This is often done to secure a lower interest rate, secure a fixed interest rate or for the convenience of simply making one payment instead of many, although usually for a much longer period of time. Consolidation can severely affect the ability of the debtor to discharge debts in bankruptcy, so the decision to consolidate must be weighed very carefully.
Bankruptcy is considered a last resort by most because of the usually severe credit implications. For consumers who owe a lot of money on their credit cards and do not have an adequate income stream, this may seem like the only debt relief alternative.