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I am trying to decide whether to go with a debt consolidation company for 3 years at $491 a month or a debt settlement company for 2 years at $340 a month. From what I understand, the settlement company will get rid of my debt faster for cheaper, but will do more damage to my credit report. I need to refinance my house in 4 years. Which program should I go with? Will it affect my refinance?

The decision on what type of solution to use must be your own when choosing between a debt consolidation company and a debt settlement company. A financial decision such as this requires a full understanding of all your income streams, debts, obligations, financial goals, timelines, etc. In short, only you can answer your own question (sorry to be so blunt).

However, I can tell you that your statements about the credit damage and the speed with which you will emerge from debt with each of the two options are correct. In general, debt settlement will have a much more damaging effect on your credit score and likely will impact the rates you get as you go to refinance in a few years. So if that is your priority, then you need to be fully aware of your credit score to protect it as much as possible.