Should you consider debt consolidation or debt management program in this economic slowdown where you are faced with threats of job loss, falling portfolio values, and rising costs of consumer goods?
According to financial experts, you probably do not need any debt consolidation or debt management if you are able to make your current payments and have reasonable interest rates.
However, if you are suffering from so much unmanageable debt that you are unable to make ends meet and make even the minimum payments, then there is a need for you to really consider if a debt consolidation loan or a debt management program is right for you.
What’s the difference between a debt consolidation loan and a debt management plan?
Debt Consolidation. Debt consolidation is a process where all your multiple debts and loans like credit cards, car loans and other high-interest debts are lumped into a loan with one monthly payment with lower interest rate. With reduced monthly payment and interest rate, you can pay off your credit card debt faster.
The catch is such loan requires that you own a house, so that the loan can be taken against equity in the home. There are risks involved with putting your house up for collateral on a debt consolidation loan.
If unfortunately something unexpected happens to your income and you find that you can’t make the proposed loan payment, you could lose your house.
This is one of the major reasons why I opted for a debt management program rather than debt consolidation. 
Debt Management Program. During a free consultation, a certified credit counselor will only recommend a debt management program after going over your income and expenses and finding that credit counseling is not enough to bring your financial back to a manageable level.
If it is determined that a DMP is right for your, the credit counselor will negotiate with all your unsecured creditors to obtain the lowest monthly obligation that satisfies all your current accounts.
Being put in a debt management program means that you make only ONE payment with reduced interest rate to One credit counseling agency on One due date; you no longer have to be stressed by paying multiple credit card payments to various banks on different due dates.
Most important of all, all late payment fees and over-limit charges are waived once you are in a debt repayment plan. No more harassing phone calls from banks, warning notices from creditors and annoying visits by third party collection agencies.
No matter which debt relief program you choose, be it a debt consolidation loan or a debt management program, your ultimate goal is to pay off all your debt and bring your finances and credit score back to the right track.
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