Free Debt Management Program

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 debt management programs versus debt settlement plans.

Although neither of the debt relief options is really something you want, it is sometimes necessary to have a better understanding of the two.

Debt Management Programs. Debt management programs essentially do what they say. The credit counseling and debt management agencies take all your bills, compile them into one lump sum, and then you make one monthly payment on that.

Sometimes however certain debt collectors will not want to work with debt management programs because it means they will get less money. Most prefer to work with major debt management groups.

During debt management usually you cannot apply for any credit cards or lines of credit with banks or credit card companies. This will last until the debt repayment program has been completed.

Debt Settlement Plans. Debt settlement is where the debt settlement companies take your money every month, but don’t make monthly payments to your creditors. Instead, they put it in a trust account, negotiate your debts with your creditors and then make a lump-sum payment when there’s enough in your account to pay a creditor in full.

Take note that debt settlement companies do not ask your creditors to stop all interest charges, late fees and over limit fees from accruing. This means while the negotiations with your creditors are ongoing, your bills will continue to grow!

If it’s so unfortunate that you’re sued and a judgment is brought against you, you’ll owe more money than before!

The process of a debt settlement can also damage your credit depending on the size of the debt. If you cannot make it usually you are turned over to a collection agency, or your goods are repossessed.

The one major difference between debt management programs and debt settlement plans is your credit. If you go with a debt management plan, your credit in most cases will be wiped clean and you can start rebuilding it. If you use a debt settlement plan however your credit will be badly damaged and you’ll have to start picking up the pieces and superglue them back together.

You usually won’t consider either of them unless you’re in financial trouble. Which, if that’s the case then you’re going to be paying attention to the differences between them. Just remember management equals monthly payment, settlement equals one big lump sum.

If neither of the debt relief options is really something you want to end up doing, then you should always try to keep your debts paid down to avoid having to resort to either a debt management program or a debt settlement plan.