Debt Consolidation vs Debt Settlement

Debt Consolidation vs Debt Settlement

The average American carries around a balance of $6,375 in credit card debt alone. That is an increase of 3% from last year.  In 2017, total credit card debt held by Americans reached $1 trillion. If you have a lot of credit card debt and are looking for a quick way out, you are not alone. You’ve probably seen several terms – debt consolidation, debt settlement, and bankruptcy. These can sound similar, and each one has its unique pros and cons. We’ll look at the first two in more depth and then compare the pros and cons to bankruptcy.

What Is Debt Consolidation?

Debt consolidation takes all your debts and rolls then into one. You then take out a loan and pay off the debts. You then pay off that loan through monthly payments. In order to get a loan, you’ll probably have to have some sort of collateral. The goal is to get a reduced interest rate and lower monthly payments. Debt consolidation is best for people who are only making minimum payments.

Since most debt consolidation plans involve loans, you may have additional fees like origination fees or closing costs. Those fees can add quite a bit to your existing debt.

Contact Pacific Debt today for your FREE consultation and Savings Estimate

Debt Consolidation Pros and Cons


  • Reduce the number of bills
  • Lessens chances of falling behind on bills
  • May be able to get lower monthly payments and interest rates


  • No control of spending habits – if you don’t reduce spending you will never eliminate debt
  • Debt is not forgiven or even reduced
  • Can take 3–5 years in a debt consolidation program to eliminate debt

Types of Debt Consolidation

There are several types of debt consolidation. These include a debt management plan (DMP), balance transfer on credit cards, personal loans, or home equity line of credit (HELOC).

A debt management program includes credit counselling and education programs. They can take a long time – up to 5 years – to complete. You will learn the roots of your financial problems and how to manage them.

Balance transfers on credit cards allow you to transfer your existing balances to a lower interest card. This sounds great except that 0% balance cards are hard to get. If your credit score isn’t over 700, you probably won’t get one. In addition, balance transfers come with a transfer fee of 2-3% on the balance and an expiration date of 12 to 18 months on the lower rate. Interest rates can then increase to more than your initial card.

Personal loans can be hard to get if you have a high debt-to-income ratio. You may end up with an origination fee, a prepayment penalty, and may need to have collateral (your car, home, etc.).

HELOCs have low interest rates but your home is the collateral. If you don’t make the payments, you could lose your house. Since it is a loan, you may have to pay application fees and closing costs as well.

Does Debt Consolidation Hurt Your Credit?

Debt consolidation can hurt your credit score and report. Taking out a loan requires a “hard pull”

on your credit report. This will lower your credit score for a bit. It can lower your credit utilization ratio if you open a new credit card and transfer all your balances to it.

What Is Debt Settlement?

In debt settlement, you negotiate with your creditor to lower the amount you owe. If negotiating is not in your skill set, there are companies like Pacific Debt, Inc. that specialize in negotiating with creditors and have an excellent track record in debt negotiation services. The secret to debt settlement is that you have to stop paying your bills in order to make creditors willing to negotiate. This action can come with late fees and creditor phone calls.

Debt Settlement Pros and Cons


  • May be able to pay less than you owe
  • Last resort before bankruptcy
  • One low monthly program payout
  • Faster than Debt Management
  • No credit requirements or collataral


  • Annoying phone calls from creditors
  • Short term impact on credit score and credit report for up to 7 years
  • Possible tax consequences
  • Risk of creditor lawsuit

Does Debt Settlement Hurt Your Credit?

Unfortunately, debt settlement does come with some credit score and credit report damage. Your late payment history may stay on your credit report for up to seven years. You should consider debt settlement for debts that are very delinquent or already in collections or if you are struggling to even pay the minimum. That way the damage is already done to your credit score.

What’s the Difference Between Debt Consolidation and Debt Settlement?

The quick answer is that in debt consolidation, you take out a loan to pay off all other bills, then pay off the loan. In debt settlement, you negotiate with creditors to lower what you owe. When comparing debt consolidation vs debt settlement, take into consideration the effects on your credit score, the fees charged in each case, how long the program will last and how delinquent your debt.


Bankruptcy is a legal action to have your debt erased. Bankruptcy is a last resort. It can stay on your credit report for up to ten years. It is also legally complex and expensive. In debt consolidation vs bankruptcy vs debt settlement, always try debt consolidation or debt settlement first.

About Pacific Debt, Inc

Unlike credit counseling agencies or debt consolidation companies, Pacific Debt’s main objective is to eliminate your debt completely. If you successfully follow our program, you may be debt free in 2 to 4 years. To be eligible for the Pacific Debt settlement program, you must have more than $10,000 in unsecured debt

Pacific Debt, Inc is accredited with the American Fair Credit Counsel and is an A+ member of the Better Business Bureau. We rate very highly in Top Consumer Reviews, Top Ten Reviews, Consumers Advocate, Consumer Affairs, Trust Pilot, and US News and World Report.

For more information, contact one of our debt specialists today. The initial consultation is free and our debt specialists will give you all your options.

Pacific Debt has helped thousands of people reduce their debt. Since 2002we’ve settled over $200 million in debt for our clients. Contact us today to see how we can help.

The Best Debt Reduction Service for Credit Card Debt

The Best Debt Reduction Service for Credit Card Debt

The holidays are over and bills are rolling in. You spent way too much money Christmas shopping and your credit card debt has reached critical limits. If this is you, you’re not alone!

Most of us rack up ridiculously high credit card balances during the holidays. Now that the new year nears, you’re seeing the full financial aftermath of Christmas.

This is a great time to start on your most important New Year’s resolution- reversing your credit card debt. Get started now. It can’t happen fast enough!

The good news is that you have several debt reduction services at your disposal. The bad news is that there is no quick-fix and options may come with negative (but short-term) consequences to your credit score.

What is a Debt Reduction Service?

A debt reduction service helps you find legitimate solutions to effectively reduce debts. There are three basic types of services – credit counseling, debt consolidation, and debt reduction. Only one, debt settlement, helps you negotiate with creditors to reduce debts by up to 50%.

What are the Different Types of Debt Reduction Services?

There are three main approaches to debt reduction. Keep in mind that none of these are perfect and each may have a negative effect on your credit rating.

  1. Credit Counseling – These companies help you investigate assistance programs that help you reduce debt. They may help you qualify for these programs too. Credit counseling is not a debt reduction program because most agencies usually only help you reduce your future interest.
    1. Debt Consolidation – Debt consolidation consolidate debts into one easy monthly payment. It doesn’t really reduce debt, it just revises your account structure. In most cases, debt consolidation actually increases the term length, so you end up paying more.
  1. Debt Settlement – Debt settlement works directly with creditors to settle debt for less than you owe. As part of the program, you accrue money in a 3rd-party escrow account. Once you have a certain amount in that account, debt settlement experts negotiate on your behalf to decrease your debt by up to 50% and pay off that debt completely. Debt settlement isn’t a quick fix. It usually takes from 2-4 years to complete.

Your debt settlement expert will guide you through the process and be in regular contact to help you through this difficult and confusing process. You have the responsibility to put aside money and forward all collections notices and bills and any harassment details to your debt settlement expert.

The Pros of Using a Debt Settlement Program

Using a debt settlement program can help you in many ways. The pros include:

    • Settling your debt for less than you currently owe. In most cases, the debt settlement company will help you settle your debt for up to 50% of your balance, depending on the creditor and their policies.
    • Guidance by a dedicated debt expert through the difficult process. In most cases, the debt settlement company has a long business history with your creditor, leading to a smoother negotiation process.
    • Avoiding bankruptcy. Debt settlement is a bankruptcy alternative, and is a last resort before declaring bankruptcy.
    • Avoiding the stigma of declaring bankruptcy.
  • Ultimately saving money.

The Cons of Using a Debt Settlement Service

    • The program isn’t quick and usually takes anywhere from 2-4 years to complete.
    • The account will generally appear on your credit report as settled for less than full balance.
    • You’ll probably encounter harassment by collection companies, ranging from scary phone calls to legalese-laden letters. Your debt settlement account manager guides you through this process to help make things easy for you.
  • Since there are fraudulent companies, make sure you research debt settlement companies and choose a reputable company like Pacific Debt, Inc.

Who is the Best Debt Settlement Company to Work With

Debt settlement can be scary and involve a lot of legalities and headaches. We recommend that you work with a reputable company, like Pacific Debt, Inc., that has positive reviews from both organizations like the BBB and from clients. Pacific Debt, Inc. has settled over $200 million in debt for their customers since 2002 and our ratings prove how effective our program can be.

    • A+ rating from the BBB with accreditation and certification
    • Ranked  as one of The Best Debt Settlement Companies of 2018 by US News and World Report
  • 4.8 star rating by with over 1000 client reviews available online.

For more information, talk with one of our debt specialists today.


If you are ready to reverse your debt, contact Pacific Debt, Inc to see if you qualify for our debt reduction program. The consultation is absolutely free and there is no obligation if our program doesn’t seem like a good match for you. You have nothing to lose.

See if you qualify for the Debt Settlement Program from Pacific Debt Inc. Start saving money today.

Disclaimer: We are not attorneys or accountants and can not give you legal advice. If you have legal or tax questions, you should contact the appropriate expert.

How to deal with debt collectors when you can't pay

How to Deal With Debt Collectors When You Can’t Pay

If one of your debts has gone to collections, you will hear all sorts of things from the person on the other end of phone call. Not everything they are telling you is true. Here is what happens if you don’t pay a collection agency and some of your options to end the constant calls.

Ending Up at Debt Collection

If you have not been able to pay your debt for the last three to six months, the creditor may sell your debt to a collection agency. At that point, you no longer deal with that original creditor and your credit report will note that you have been sent to collections.

You still owe the entire amount. If you absolutely can’t repay the entire amount, the collections agency would rather collect some money than nothing. This may allow you to negotiate a deal.

Will it hurt your credit to negotiate? Yes, but so will defaulting on a debt.

Chat with one of our debt experts today to find out more about our debt relief program.

What to Expect If You Don’t Pay

If you cannot pay a debt collector, the following may happen:

  • You’ll be reported to credit bureaus, damaging your credit and ability to get loans
  • Someone will write or call you regularly
  • Assets may be repossessed or a lien placed on it – home, car, rent-to-own items, etc.
  • You may be sued – always respond!
  • You may be reported as in default or delinquent
  • You may end up at a different collections agency

Working with A Collection Agency or Debt Collector

The first and most important thing to know is that you have federally guaranteed rights and many states have similar rights. Here is what a debt collector cannot do under the Fair Debt Collection Practices Act (FDCPA):

  • Contact you between 9 p.m. and 8 a.m. without your permission
  • Threaten violence or using profanities when speaking to you
  • Contact third parties (family, friends and employers) about your debt or otherwise embarrass you
  • Speak to your employer except under limited conditions
  • Pretend to be a government official or an attorney
  • Send letters that look like attorney or governmental letters but that are not
  • Send derogatory messages about you to a credit reporting agency
  • Send information on a postcard or via social media
  • Attempt to collect an expired debt
  • Hire an unlicensed credit collection agency
  • Communicate with you if you are represented by an attorney

There are a few things that you SHOULD NOT do:

  • Make a good faith payment. This payment can restart the expiration clock
  • Be rude to a collector. It can work against you if the phone calls are replayed in court
  • Let your contact information get out-of-date (the debt collection agency can contact third parties to track you down)
  • Admit that it is your debt or promise to pay – it can be construed as a contract
  • Give out financial information like your social security number or the value of a property

There are things you SHOULD do:

  • Take notes when you speak to a debt collector. Write down date and time, debt collector name, which debt, and what the debt collector says
  • Keep all mail, copies of texts, etc
  • Tell the collector if you legitimately can’t pay. They may try to work with you
  • Tell the collector if the debt is not correct
  • Give them your current contact information
  • Consider telling the collector to stop contacting you. If you want to work towards a settlement, you may not want to take this step

Speak to one of our debt experts right away to find out more information

What Steps Can You Take Once in Collections?

There are several options to get a debt collector to go away.

Ignore the debt and calls. You may end up in court or the collectors may give up. This is not a good option.

Set up monthly payments – Because the debt collector bought the debt for less than it is worth, they may be willing to negotiate. If you want to try this, offer to pay 40 to 50% of the total amount. Make sure the get the following in writing:

  • The amount you agree to repay and what you are repaying – are you paying against what you owe or settling the bill once you pay
  • The name of the debt – make sure you are paying off what they think you are paying off.
  • The collection agency should have the name of the original creditor and account number.
  • The exact day the payment is due.
  • The exact name of the collection agency since debt can be sold
  • The effect on the account after payment. Will it be reported to a credit agency, etc.

Debt consolidation requires you to take out a loan to pay the original debt. It may not be possible to get a loan if you are in collections.

Debt management includes working with a credit counseling agency to learn to better manage money and pay off debts

Bankruptcy is a last resort to handle your bills. It is expensive and you need legal advice and representation.

Debt settlement includes signing up with a debt settlement company like Pacific Debt, Inc. If you qualify, a debt settlement company with negotiating with your debtors while you build a fund to begin repaying debts. You can also do this on your own, but it takes determination.

Pacific Debt, Inc.

Pacific Debt, Inc offers a free consultation. Our debt specialists will perform an in-depth analysis of your debt and advise you on your options. They ensure that you understand all options and all the program details.

Depending on your financial situation, Pacific Debt, Inc works with you to have you debt free in one to two years. We do not make money unless your debt relief program works for you. You have nothing to lose and every to gain by contacting Pacific Debt for your free consultation.

For more information, talk with one of our debt specialists today.


What is a good debt to equity ratio?

What is a Good Debt to Equity Ratio?

Debt ratio is one of those terms that get thrown around when looking for loans. What is debt ratio and what does it mean for you and your debt? There are a couple ways to look at debt ratio, but first, we need some definitions of what actually is a good debt to equity ratio.


Equity, for people, is what you have that is worth money or that has grown in value. Homes are the most common types of equity. If you have a mortgage of $150,000 and the house is valued at $200,000, you have $50,000 in equity.

Cars and boats generally don’t have equity as they lose value over time. Stocks, jewelry, artwork, and similar items may or may not have equity. It depends on how much you bought it for and how much someone is willing to pay for it.

If you are would like more information on what a good debt to equity ratio is, contact us for your FREE consultation today. See how much money you can save with our debt settlement program.


An asset is like equity but includes your after-tax income. We are going to use asset and equity to mean the same thing.


Debt is what you owe. Loans, credit cards, mortgages, student loans, and similar items feed into debt.

Debt to Equity Ratio

A ratio compares one value to another. The debt to equity ratio compares how much debt you have to how much equity you have. The formula is below. Feel free to use the equation to find what your good debt to equity ratio is.

what is a good debt to equity ratio image

If you owe $100,000 and have total assets of $200,000, you have a debt ratio of ½ or 0.5 or 50%. If you have total debts of $200,000 and equity of $100,000, you have a debt ratio of 2 or 200%. The lower the debt to equity percentage, the better you are situated.

Debt to Asset Ratio

Most lenders use debt to asset ratio as a clearer look at debt to equity ratio. This adds in your after-tax income for a better idea of how easily you can repay your debts.

You can figure out debt to assets two ways. The first is all debt except mortgage. The second is with a mortgage. Let’s break it down with some numbers.

Without mortgage: Add together all debts (loans, credit lines, credit cards, etc.) and divide by after tax income. Let’s say you have $10,000 in debts and an after-tax income of $59,000 (the median US income). Your debt ratio is 0.17 or 17%.

With mortgage: Add together all debts plus the total of 12 monthly mortgage payments and divide by after tax income. Now you have $10,000 in debt plus $12,360 (based on US averages) in mortgage payments. Your debt ratio is now 0.38 or 38%.

What is a Good Debt to Equity Ratio?

Now that you have some numbers, what do they mean? The ideal debt to equity ratio, using the formula above, is less than 10% without a mortgage and less than 36% with a mortgage.

If you exceed 36%, it is very easy to get into debt. Most lenders hesitate to lend to someone with a debt ratio over 40%. Over 40% is considered a bad debt equity ratio for banks.

High and Low Debt Ratios

When you look at debt to equity ratios, a high ratio means you probably don’t have enough equity to cover your debts. A low ratio means you can take advantage of your equity to take out loans if you want.

How to Improve your Debt Ratio

Possibly the easiest way to improve your debt ratio is to pay off debt. If you have credit card debt in excess of $10,000 and are having trouble paying it down, Pacific Debt, Inc may be able to help you out.

Contact one of our debt specialists for a free consultation.

For more information, talk with one of our debt specialists today.


Disclaimer: We are not attorneys or accountants and can not give you legal advice. If you have legal or tax questions, you should contact the appropriate expert.


Is Debt Settlement A Good Idea?

Is Debt Settlement A Good Idea?

When you are in debt, you have several options. Bankruptcy, consolidation, settlement, credit counseling, and ignoring the whole mess are all options. What is the best one for your situation? In this article, we’ll take a look at debt settlement.

What is Debt Settlement?

In debt settlement, you and your creditors reach an agreement in which you pay less than you owe. A debt settlement company like Pacific Debt can help you to settle your credit card debt and learn to live debt free.

How Do I Settle?

Debt settlement works best if you are NOT current on your payments. If you are making payments on time, creditors may assume that you are capable of paying back your debt.

Once you convince them that you are unable to pay your debt, they may be more willing to reach a debt settlement agreement. Pacific Debt has an excellent track record of settling accounts and knows which creditors are most like to settle.

Some creditors will insist that you settle in full. Others will settle for far less than you owe.

You will make lump-sum payments to eliminate each debt.

I Don’t Have Money for a Lump Sum Payment

Most people don’t have a savings account large enough to cover their debts. If you did, you’d pay off your debts upfront. Pacific Debt has a solution.

Pacific Debt will set up an escrow account that you deposit money into regularly. Since you will not be paying on your debt, you take that money and set it aside. As it builds up, you settle each debt as you have funds.

How Long Does Debt Settlement Take?

Depending on how much you owe and how much you can set aside, debt settlement can take between 2 and 4 years.

How Much Debt Do I Have to Have?

Pacific Debt requires you to have $10,000 in unsecured debt, generally credit cards, and be unable to make more than minimum payments.

Many people panic when they hit a $15,000 credit card debt amount. Since that is more than most Americans earn in 3 months, a $15000 credit card debt is frightening. Pacific Debt can help.

Can I Settle Student Loan Debt?

Yes, you can settle student loan debt. However, it is not easy. Federal student loans have three options to settle student loans. All three come with a big catch.

  • Option 1 – pay off current balance plus accrued interest
  • Option 2 – Pay the total principal and half of the interest balance
  • Option 3 – Pay 90% of the total principal and balance owed

What is the catch? You must make a lump sum payment within 90 days.

Pacific Debt can work with you or refer you to a trusted partner who can help settle student debt. Get your free debt settlement consultation today.

What are the Drawbacks to Debt Settlement?

If this sounds too good to be true, good for you for thinking about the drawbacks! There are several and these should play into your decision making.

When you stop paying on your debt, your credit score will take a hit. It generally recovers as you pay back your debts. The fact that you settled will show up on your credit report. It can take up to seven years to remove a debt settlement notation from your report.

You may be sent to collections. This comes with its own set of annoyances, from phone calls to letters. Once you have convinced creditors that you are serious about settling, creditors generally settle.

What are Pacific Debt’s Settlement Steps

First, you need to enroll and get a free consultation. You will be given options that may work for you. Choose the best solution for your unique situation.

Next, stop making payments on your unsecured debt. Pacific Debt will help you set up an FDIC insured Special Purpose account. You will make deposits into that account every month.

While the balance grows, Pacific Debt negotiates with your creditors. Your account manager will be in contact every few weeks. As your account grows, your settled debt will be paid off.

It takes about 24 to 36 months.

If you only want to improve your credit scores or lower interest rates, debt settlement is not the way to do it.

If you have questions, contact us today.

For more information, talk with one of our debt specialists today.


Disclaimer: We are not attorneys or accountants and can not give you legal advice. If you have legal or tax questions, you should contact the appropriate expert.

Should you file bankruptcy because you cant pay your credit card bills?

Should You File Bankruptcy Because You Can’t Pay Your Credit Card Bills?

Americans collectively have $1 trillion in revolving debt balances – most of that is credit card debt. If you are one of the millions of Americans with credit card debt, know that you are not alone. It might not help, but misery does love company!

If you are having trouble paying your credit card bills, you are probably looking for a solution. Bankruptcy might seem like a great option. You might get your debt wiped out and be able to start over again.

Before you decide on bankruptcy, check out your options very carefully. Bankruptcy has some serious consequences.

Is Bankruptcy an Option?

There are two forms of consumer bankruptcy. Chapter 7 is designed for people who absolutely can not pay their bills. You must pass a means test and earn under your state median income for your family size. Chapter 13 is for people with a steady source of income and specific amounts of unsecured and secured debt.

For some people, bankruptcy is the only option. If you owe more than you can realistically pay off, you may need to seriously consider bankruptcy.

Bankruptcy can provide immediate debt relief and puts an immediate stop to the harassment. In some cases, all of the unsecured debt is forgiven, and you get a “clean slate.”

Pros of Bankruptcy

  • Stops Bill Collections – No more collection calls and letters.
  • Eliminates Credit Card Debt – Depending on the BK you file, all your debts could get wiped away.
  • Allows the opportunity to start rebuilding your credit – Enjoy a fresh financial start!

Cons of Bankruptcy

  • Damaging to your Credit – Your credit rating takes a hit after you file a bankruptcy. It stays on your credit report for 7-10 years depending on the type of bankruptcy that was filed.
  • Cost of Filing and Lawyers – Bankruptcy can be expensive. There are filing fees, and lawyers can cost thousands of dollars. Make sure to check all your options carefully.
  • Physical and Mental Drain – Until your bankruptcy is finalized, you’ll still get creditors’ harassing phone calls and threatening legal letters. Many people agonize over the stigma of bankruptcy.
  • New Credit and Loans – Your credit will probably take a severe hit. You will, at some point, need to start rebuilding your credit. It’s very difficult to get approved for new loans with a bankruptcy on your credit history.

If bankruptcy appears to be your only option, you may be a candidate for debt settlement. Pacific Debt may be able to help you avoid bankruptcy while getting out of debt.

For more information on debt settlement, talk with one of our debt professionals.


Is Debt Settlement a better option than Bankruptcy?

Debt settlement is a last resort to filing a bankruptcy. First, what is debt settlement? In debt settlement, you negotiate with your creditor to agree on a reduced balance. Pacific Debt is one of the leading debt settlement companies in the United States. We will negotiate with your creditors while helping you learn to live debt free.

Pacific Debt can help you if:

  • Have more than $10,000 in unsecured debt (generally credit card debt)
  • Live in a state where we do business
  • You are having difficulties making minimum payments

Pacific Debt is not for you if:

  • You want ONLY to improve your credit score
  • You ONLY want lower interest rates
  • You can make more than minimum payments and have a good credit score

Is debt settlement a better option than bankruptcy? It depends on your unique situation but here are some points to take into consideration.

  • Do you only make minimum payments on your credit cards?
  • Do you use credit cards to pay for necessities?
  • Are you using one credit card to pay off another?
  • Are bill collectors calling or creditors suing you?
  • Are you in danger of foreclosure?
  • Are you thinking of withdrawing 401K monies to pay your debt?
  • Have you lost your job?
  • Do you have a lot of medical bills?
  • Are you getting a divorce?

If you answer yes to any of these, you may be a candidate for debt settlement.

For more information on debt settlement,
talk with one of our debt professionals.

Who Can Help me with Debt Settlement?

Pacific Debt is a Debt Relief Provider with over 15 years of experience. Pacific Debt offers debt relief solutions tailored to your unique situation and budget. Our certified counselors help you work up a budget and  explain your options to you

  • Accredited by the Better Business Bureau with an A+ Rating
  • Rated 4.5/5 stars by (over 450 verified reviews)
  • Rated 5/5 stars by TrustPilot based (over 400 verified consumer reviews)
  • US News and Report  – named Pacific Debt as One of the Best Debt Settlement Companies of 2018

Pacific Debt has helped thousands of people reduce their debt. We have settled over $250 million in debt for our clients since 2002. Contact us to see how we can help you.

How do I get started and how long will it take?

Once you make the decision to get out of debt, you apply through our website. You’ll be connected with a certified debt relief specialist who will review all your options. If debt settlement is right for you, we move forward on getting you enrolled.

If it is not, we refer you to one of our Trusted Partners who can help you with other options.

As you enter our debt settlement program, your certified debt relief counselor will analyze your debt, monthly expenses, and your income. They look at your current budget and determine a payment estimate that works for you. They then work with your creditors to agree on a lesser amount of debt and a repayment schedule. An Account Manager will be with you every step of the way.

For more information, talk with one of our debt specialists today.


Disclaimer: We are not lawyers and are not giving legal advice. We strongly recommend speaking to a professional before making any decisions.


How Does Debt Consolidation affect your Credit Score

How Does Debt Consolidation Affect Your Credit Score

What is Debt Consolidation?

Debt consolidation combines most of your debts into one loan with a lower interest rate. It allows you to consolidate your monthly payments and hopefully allowing you to get debt-free sooner.

There are several ways to consolidate your debt. You could do a balance transfer credit card, take out a personal loan, borrow from your retirement account or against your home’s equity. You can also work with a debt consolidation company.

There are other options than debt consolidation. Pacific Debt offers debt settlement options for people with more than $10,000 in unsecured (generally credit cards) debt.

For more information on both debt consolidation and debt settlement,
talk with one of our debt professionals.

Does Debt Consolidation Hurt Your Credit Score?

Debt consolidation hurts your credit score in the beginning. Before getting a loan or getting a new credit card, you will have to have a “hard” credit check. This generally lowers your credit rating by a few points on each inquiry. Before you apply for new credit, research the different loans and ask for quotes based on “soft” credit checks. You can make an informed decision and limit the number of hard checks.

Opening the new account will also lower your credit scores for a short time period. However, as you pay off your debts on time and the account age, your credit score will improve. As you pay off your debts, keep some of the oldest credit cards open (and debt-free) to improve your credit history.

Should I Consolidate My Debt?

There are good reasons to consider debt consolidation. By lowering interest rates, you’ll save money. Just make sure that balance transfer fees don’t eat up the savings.

Rolling many debts into one debt can make your life simpler. If you’ve been plagued by missing or late payments, you may save money by avoiding penalties. Not having missing and late payments will help your credit score. Payment history makes up 33% of your credit score, so a better payment history is important.

A lower-interest loan will let you put more money toward the principal instead of interest fees.

For more information, talk with one of Pacific Debt’s debt professionals.

Where Do I Start?

    1. There are several strategies that make debt consolidation work.
      1. Have a plan: transferring debt around without paying it off won’t get you debt free or improve your credit score.
      2. Make certain that your consolidation loan will save you money, get you out of debt, and raise your credit score. Take fees into consideration.
      3. Investigate several options
        1. Balance transfer credit cards – these come with fees, so double check them to make sure that any interest savings aren’t eaten up. Check the time limits on paying off your transfer. The interest rate may increase dramatically after that time limit. Promo dates are generally between six and 24 months. PAY OFF your transfer before that date. If you cannot, this may be a terrible idea. Know the payment due date!
        2. Personal loans – Lower interest rates can help you pay off higher-interest credit cards. Shop around and ask for quote based on soft credit checks. Double check the terms as the interest rates may be very high.
        3. Retirement account loans – Talk with a professional accountant before doing this. There are severe tax penalties for not paying back a retirement account loan.
        4. Home equity (HEL) or line of credit (HELOC)- If you own a home with equity (you owe less than you can sell the house for), investigate this type of loan. You will need to have more equity than you do debt for this to work in your favor.  Be aware that if you do not pay your home equity loan back, you can lose your house.

Pacific Debt can help you understand your options.

What Should I Expect?

Expect a hit on your credit score, although you can limit the effect with soft credit checks. If you pay off debts, stop missing or making late payments, and then pay off your new loan, you should see improvement in your score over time.

If you have questions, Pacific Debt may be able to help you understand your options.
However, Pacific Debt is not able to offer legal advice or answer tax questions.


Our Debt Specialists can help you explore your alternatives to bankruptcy, including debt consolidation and debt settlement options.



We are not lawyers and are not giving legal advice. We strongly recommend speaking to a professional before making any decisions.

What Percentage of Debt is Typically Accepted in a Credit Card Settlement

What Percentage of Debt is Typically Accepted in a Credit Card Settlement?

One of the most common questions people have as they investigate settlement options is how much they will pay on each unsecured loan. There is no set answer but there are expected percentages. There are several factors that play into settlement percentages.

How Much Debt Do You Owe?

To qualify for Pacific Debt’s settlement program, you generally need to have in excess of $10,000 in unsecured debt, particularly credit card debt.

Once enrolled in Pacific Debt’s settlement program, you make monthly payments into a dedicated account. If you make these payments, our statistics indicate that you may pay off your debt at between 65% and 85% (including fees) over 24 to 48 months. That means that on a $10,000 debt, you can expect to pay $6,500 to $8,500. However, each situation is unique. Settlement percentages vary based on the individual creditor, your hardship, and available funds.

Talk to our Debt Experts for a FREE Consultation today.

Who is the Creditor?

Every creditor is different and has different policies. How aggressive they are may depend on your state of residence, homeownership status, and employment.

Pacific Debt has an excellent track record in working with most creditors in many states. We will do our best to get you the best settlement possible. However, for more aggressive creditors, settlement percentages may be higher or they may be less inclined to accept settlement funds in installment payments.

Contact us today to enroll in our debt settlement program. Our debt experts can explain to you exactly how our program works.

What is Your Payment History?

Your payment history has a big effect on your credit score. It also has an effect on how willing the creditor will be to settle. The more current you are, the less willing the creditor will be to settle.

In order to settle, you must be behind on all or most of your unsecured debts over $500. Otherwise, the creditor will see that you are paying off loans at 100% plus interest and may not be willing to settle.

Unfortunately, being behind on payments has a big effect on your credit score. Entering into a settlement program may also damage your credit score initially, as accounts go into delinquency but you may begin to see improvements as you pay off your debt.

How Old is your Debt?

As your debt ages, the creditor is less interested in holding it. They will “charge off” the debt after 180 to 210 days by selling or assigning it to a debt collector. In general, you’ll have more success in settling once the debt has gone to collections.

As you approach the 180-day mark, the creditor may be willing to settle, especially if you have a lump sum to pay off the debt.

Once the debt has gone into collections, you will most likely be eligible for a settlement. Creditors may be more lenient on settlement terms.

Depending on your state’s statute of limitations, once your debt ages past the cutoff, it is no longer collectible. Most states have a statute of limitations between 3 and 10 years.

Pacific Debt’s Proven Results

The following percentages reflect our settlement successes from our Debt Relief Program. Remember that each situation is unique and percentages vary. We have long-term working relationships with all of the creditors listed below. As a result, you’ll most likely get a better settlement when using Pacific Debt. These 2018 YTD percentages are based on the current balance at the time of settlement.

Creditor Name Settlement Percentage
Bank of America 47%
Capital One 51%  Read actual case study here
Chase 33%  Read actual case study here
Citibank 46%
Discover 59%
Kohl’s 47%
Lending Club 46%
Nordstroms 45%  Read actual case study here
Paypal 46%
PNC Bank 31%
Synchrony Bank 51%
USAA $45%
Wells Fargo 45%

click here to read our client testimonials.

Real People, Real Settlements

Kelvin, a San Diego insurance worker, owed $82,120.59 to seven different credit cards. Because he works on commission, his income varies every month. With Pacific Debt’s help, Kelvin was able to settle all seven accounts for $28,823.26. His payoff averaged 35% overall seven, with the highest percentage at 50%.

Filippo, from Los Angeles, recently divorced. He wanted to use the proceeds from the sale of the marriage home to settle two debts totaling $21,422.12. Pacific Debt helped him settle for $9,482.00 or an average 44% payoff. His highest percentage payoff was 64%.

Leslee, a self-employed San Franciscan, was out of work for medical issues. She owed $9,840.54 on two debts. After working with Pacific Debt. she was able to settle both debts for 60% or $5,922.55. The highest payoff was 80%.

Click here to see Pacific Debt reviews from our clients.

Each debt settlement case is unique.

Our Debt Specialists can help you explore your alternatives to bankruptcy, including debt consolidation and debt settlement options.


Clients who make all their monthly program deposits pay approximately 50% of their enrolled balance before fees, or 65% to 85% including fees, over 24 to 48 months (some programs lengths can go higher).

Not all clients are able to complete our program for various reasons, including their ability to save sufficient funds.

Our estimates are based on prior results, which will vary depending on your specific circumstances.

We do not guarantee that your debts will be resolved for a specific amount or percentage or within a specific period of time.

We do not assume your debts, make monthly payments to creditors or provide tax, bankruptcy, accounting or legal advice or credit repair services.

Our service is not available in all states and our fees may vary from state to state.

Please contact a tax professional to discuss potential tax consequences of less than full balance debt resolution.

Read and understand all program materials prior to enrollment.

The use of debt settlement services will likely adversely affect your creditworthiness, may result in you being subject to collections or being sued by creditors or collectors and may increase the outstanding balances of your enrolled accounts due to the accrual of fees and interest. However, negotiated settlements we obtain on your behalf resolve the entire account, including all accrued fees and interest.

5 ways to get debt relief from credit cards

5 Ways to Get Debt Relief from Credit Cards

Credit card debt is a problem for many Americans. For many people keeping up with monthly credit card payments is increasingly difficult. Causes vary. An illness, job loss, low income, or poor spending habits may be at the root. Spending more than you earn is very easy to do, especially with the convenience of a credit card.

If you cannot make your monthly credit card payments, act immediately! It’s easy to get caught up in increasing debt. You may not be able to break free without the help of a debt relief professional.

What types of debt relief help are available? We’ll discuss some options that may help you pay off debt. Hopefully, you can use these options to pay off your debt and start enjoying a debt free life.

What is Debt Relief?

Debt relief can come in the form of debt settlement which is the ability to negotiate or settle, your loan amount with the creditor. You may be able to lower the interest rate or even eliminate your entire debt.

Your situation is unique, and no one method fits everyone. Explore your options carefully and pick the one that makes the most sense for your situation.

Get a Free Consultation and find out how our Debt Settlement Program can start helping you live a debt free life today!

What Are My Debt Relief Options?

  1. Make Your Monthly Payments – Use our Credit Card Interest Rate Calculator to see exactly how much you’ll be paying on interest and principal.
  2. Debt Settlement – negotiate a lower balance on your debt amount
  3. Debt Consolidation – taking out a loan to pay off other debts
  4. Debt Management – working with a credit counseling agency
  5. Bankruptcy – a legal remedy to settling out of debt. Make sure to consult a lawyer in your area for more information

The last four options come with credit consequences on your Fico score. However, not paying your debt on time may also result in negative credit consequences. The biggest benefit of paying off your debt is that you will be able to rebuild your credit later. You can improve your credit score with effort and learn better money management skills.   

There are several types of debt that cannot be eliminated or settled. These include child support, student loans, and other secure loans.

What Do Debt Relief Companies Do?

Debt relief companies negotiate on your behalf with your creditors to help settle your debts. The debt specialists have worked with thousands of creditors. They know which creditors are willing to work out solutions and which are completely unwilling to settle.

Debt specialists know state and federal laws that govern lawsuits, collections, and statutes of limitation. Your debt specialist will guide you through each step of the process. The credit repair program takes two to four years and you’ll be in contact with your debt specialist at least once a month.

Once your debt is relieved, a reputable credit repair company will help you repair your credit rating. A good credit score makes it easier to buy a car, get a mortgage or even get better rates on credit cards and loans.

Steps Debt Relief Companies Take

  1. Your debt specialist will access your free annual credit report from Equifax, TransUnion, and Experian. You are entitled to one report each year, but they can be confusing. A debt specialist will guide you through the report.
  2. A debt specialist will go through your budget with you to see how much you can afford to pay each month
  3. Your debt specialist will work with your creditors to help settle your debts. They may be able to lower interest rates, settle on a lower amount, or even get the entire debt erased.

Who’s the Best Debt Relief Company For Me?

Pacific Debt, Inc has an excellent track record with credit repair. In business since 2002, they are in downtown San Diego. Pacific Debt has earned an A+ rating from the Better Business Bureau and is a BBB Accredited Business. They have settled over $200 million dollars in consumer debt. ranks them as one of the best debt settlement companies.

Pacific Debt offers a free consultation. Their debt specialists will perform an in-depth analysis of your debt and advise you on your options. They ensure that you understand all options and all the program details. Depending on your financial situation, Pacific Debt works with you to be debt free in one to two years. The company does not make money unless your debt relief program works for you. You have nothing to lose and every to gain by contacting Pacific Debt for your free consultation.

Read real reviews from people who have used Pacific Debt to settle their credit.

A Certified Debt Counselor can help you from drowning in debt!


How to stop drowning in credit card debt

How To Stop Drowning in Debt – A DIY Guide

Learn How To Stop Drowning in Debt Yourself

People fall into debt each day – it might just be a national epidemic. The problem with being in debt is that once you’re in, you’re in! It’s very difficult to get out of debt because it can be a financial trap.

If you can’t keep up with your credit card payments, or miss a payment, your credit will take a nose dive right into the toilet.

Cash is king, but good credit is just as important! Most people do not have cash reserves for a big purchase and must depend on credit. This is where good credit can be a godsend. Let’s discuss the necessary steps to take to keep you from drowning in debt.

Figure Out Your Debt Situation

Your first step in getting out of debt is to identify all your debt.

  • Get a copy of your credit report from or This gives you a list of all your creditors
  • Figure out the current debt amount, interest rate, monthly payment, due date and any other important information
  • Record all this so it is very clearly laid out

Once you have all the information you can make an informed decision. It might be depressing but it is important to know.

Most experts encourage you to pay off the highest interest debt first. Others suggest paying off the smallest debts first. Sometimes paying off the smallest debt makes you feel like you are making progress. It depends on your unique financial situation.

You may be able to refinance or renegotiate terms, interest rates, and other debts. Many people are drowning in student loan debt. Student loans are difficult to renegotiate, but refinancing can be done.

If you need help learning what your interest charge on purchases will be, try our finance charge calculator.

Start a budget

Next, find out where all your money is going. Write everything down. Include where your cash is going, where you use your credit card, and what you can eliminate.

This is the basis of your budget. Budgeting doesn’t have to be a chore, but it is the only way you are going to get out of debt.

Your budget should include necessary and discretionary expenses. Your budget should consider the following, although you may not have expenses in every category. Don’t forget annual expenses like car registration.

  • Housing
    • Mortgage/Rent
    • Property Taxes
    • Household Repairs
    • HOA Dues
  • Utilities
    • Electricity
    • Water
    • Heating
    • Garbage
    • Phones
    • Cable
    • Internet
  • Groceries
    • Food
    • Alcohol
    • Toiletries
    • Cleaning Supplies
  • Personal Expenses
    • Gym Memberships
    • Hair Cuts/Salon Services
    • Cosmetics
    • Babysitter/Child care
    • Child Support
    • Alimony
    • Subscriptions
  • Transportation
    • Fuel
    • Tires
    • Oil Changes
    • Maintenance
    • Parking Fees
    • Repairs
    • DMV Fees
    • Vehicle Replacement
  • Healthcare
    • Primary Care
    • Dental Care
    • Specialty Care
    • Medications
    • Medical Devices
  • Clothing
  • Gifts
  • Emergency Money
  • Entertainment Money
  • Household Supplies
  • Insurance
    • Health Insurance
    • Homeowner’s Insurance/Renter’s Insurance
    • Auto Insurance
    • Life Insurance
    • Disability Insurance
    • Identity Theft Protection
    • Longterm Care Insurance

Figure out how much you spend in each category. Be honest. If you eat out every day, include that! Now you have a good picture of where your money is going and how much/where you are spending it.

Your next step is to decide necessary and discretionary expenditures. You may have to give up eating out, drop a gym membership, or stop buying coffee for a while. It won’t be forever.

See if there are places you can cut down your necessary expenses. Could you get a less expensive car, move to a new place, or save money on other expenses?

Do What You Can Yourself

  1. Consider refinancing debt
  2. Call credit card companies, etc. and renegotiate your interest rates
  3. Drop or decrease expenses
  4. Consider consolidating debt through a home equity loan
  5. Use cash to avoid the temptation to whip out a credit card
  6. Wait 24 hours before purchasing a non-essential item
  7. Add another/better job if possible

Get Professional Help Paying Off Debt

A debt elimination agency may be able to help you set a budget, renegotiate interest rates, and teach you how to manage money more effectively.

Ask about

  • Services offered – look for a range of services
  • Free educational information
  • Developing a plan for the future
  • Fees/Contributions – get them in writing
  • Contracts or Agreements
  • State Licensing
  • Counselor qualifications and how they are paid (commission, etc)
  • Security of personal data

Getting into debt is easy. Paying off debt is what takes work and effort. Following these suggestions can definitely help you to stop drowning in debt.

A Certified Debt Counselor can help you from Drowning in Debt!


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