Which one is the costliest debt reduction method amongst all?

If you settle your debts through a debt settlement company, then it can be a bit expensive as you have to pay a fees to the debt settlement firm. Moreover, the forgiven debt is counted as a taxable income by the Internal Revenue System. Otherwise, debt settlement is a good option as it helps you to get rid of your debts by paying less than what you owe. If you do DIY debt settlement, then you can save money on the fees.

It is difficult to say which is the most expensive debt relief option. You should focus on other areas and long term saving instead of just concentrating on saving money for the time being.

If your choose consolidation, you’ll have to pay the entire outstanding debt owing and it may improve your credit score. This MAY help you in the long run, as your future creditors will consider you as creditworthy and you may qualify for loans at suitable terms and conditions.

But, if you choose settlement, you may save now, but your credit score WILL suffer. Moreover, as Phil has stated, you also may have to pay a tax on the forgiven amount.

Instead of opting for consolidation, you can use debt snowball strategy to pay back your DEBT yourself and save the money which you otherwise will have to pay as professional fees if you take help from a consolidation and settlement company.

In a settlement process, you’re paying the fees to the settlement company, a certain amount of money to your credit card company and tax on the forgiven amount.

In a debt consolidation process, you’re paying the fees to the debt consolidation company, the entire outstanding debt, and no tax.

When you’re choosing DIY debt relief option like debt snowball, debt avalanche, you’re not required to pay fees to any company; that means, you’re saving money and also paying off your debts.

However, each strategy has pros and cons. A professional can give you a better answer regarding the best strategy and your profit according to your income and expenditure.