By Debt consoliation, large numbers of loans are set off by availing a fresh loan. This enables reduction of the rate of interest in a particular loan. Collateral is an important facet of debt consolidation. Fixed property like a House or Land is used as collateral and this makes the debtor credit worthy. This practice has been instrumental in reducing the magnitude of financial distress. The dangers of bankruptcy have been considerably minimized.
By Debt settlement, the creditor and debtor enter into an agreement to revise the final settlement. Professional advice is made available for debtors interested in going for debt settlement.