The question of which is better, debt consolidation or debt settlement, is completely dependent upon circustances. Debt settlement makes more sense when dealing with accounts that are already seriously delinquent - in these instances, much of the damage to a credit score has already been incurred, and although a debt settlement will remain on a credit report for seven years, the prospect of paying less than the full amount owed could be worth the stain, particularly when the account is no longer in good standing. Debt Consolidation makes sense for individuals who can simplify the repayment process by paying off a number of balances through the proceeds of a debt consolidation loan that is often taken out an overall lower blended interest rate, thereby saving money on interest expense while also usually lowering the monthly payment.