Financial Resource

If you’re in debt up to your ears then you’re probably trying to do something about it. There are many options but essentially it comes down to a debt management program versus debt settlement.

Although neither of these options is really something anyone of us wants to do it is sometimes necessary. Let’s compare the two so we can have a better understanding.

Alright let’s look at a debt management program. Debt management program is offered to people where a credit counseling company consolidates all of your debts into one payment.

After a lower monthly payment is worked out, you pay this till the debt is gone. All the major credit card companies will work with a debt management program rather then see you go into a collection agency.

One drawback to this is you cannot apply for any new credit cards or get loans of any kind. Essentially your credit is frozen during this period to ensure your not trying to take advantage of the system. This type of repayment program usually lasts around two to five years. Maybe longer, it depends on the size of your debts.

Now let’s go over a debt settlement plan. Debt settlement plan differs from debt management program as instead of paying a monthly payment, you pay the whole amount up front.

In order for this program to work you have to have a large amount of money on hand for a one time sum. Inability to meet this requirement will probably end up with you getting calls from a collection agency.

The primary difference between these two programs is what the end up doing to your credit. A management plan usually leaves you in better shape with an easier time of restoring your credit while a settlement plan usually leaves your credit in a blasted wreck and takes a while to restore. Make sure to think carefully before you choose.

Neither of these options is really something anyone wants to end up doing. You should always try to keep your debts paid down to avoid these. However things have a habit of sneaking up on people. During these times it is nice to know we can go somewhere to get everything under control.

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