Both debt settlement and consolidation can get you out of debt. Debt Consolidation works to lower you interest rates by basically transferring your debts over to a new single loan with better interest rate. A popular alternative to consolidation is known as debt settlement or debt negotiation, which works by actually reducing what you owe to creditors. With debt settlement, a third party negotiates with your creditors on your behalf to reduce what you actually owe in balances. It's similar to debt consolidation, but the company that arranges the settlement does not 'buy' your debt, they just negotiate better payment terms and interest rates - then collect money on your behalf to divide up amongst your outstanding creditors.

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