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.

Getting help from credit counseling service doesn’t mean that you must participate in a debt management program. You do not need a debt management plan if a credit counselor determines that you just need a little advice on budgeting and money management.

But if your unsecured debts including student loans, payday loans and credit card debts are out of control, then you need a qualified debt management program counselor to take time to go through your debt and income levels, discuss debt relief options for getting out of debt, and explain the pros and cons of a debt management program to you.

Beware of credit counseling agency that enrolls you in a debt management program automatically without providing assistance with budgeting and money management!

Once it is determined that a debt management plan is the right debt relief plan for your financial situation, the credit counselor will start negotiating and creating a payment schedule with each of your unsecured creditors in an attempt to lower the total amount of money owed, reduce your interest rates, and have all late fees and over-limit charges removed.

Make sure the monthly payment that the debt management counselor works out for you is an amount that you can afford; a debt management repayment which is higher than what you can afford each month is not going to help you make any progress.

Of course, if given a chance, you don’t want to have to resort to either of these financial relief programs in your lifetime.

Debt Management Programs. Debt management is a program where a consumer credit counseling service company combines all of your debts into one big sum and works out a monthly payment that you can afford. You pay this lower monthly repayment until all 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.

There is one catch though. During the course of your debt management program, you cannot apply for new credit of any kind anywhere.

Debt Settlement Plans. Debt settlement differs from debt management 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.

If neither of the debt relief programs is what you want, then just keep your bills paid on time.

The primary difference between a debt management program and a debt settlement plan is whether you credit score will get hurt.

So, will joining a debt management program or debt settlement plan negatively affect your credit score?

Credit card debt management program usually leaves you in better shape with an easier time of restoring your credit while while debt settlement usually leaves your credit in a blasted wreck and takes a while to restore.

As you know that bad things do have a tendency to happen when you are least prepared, just keep in mind you do have these two choices.

“Hi, I am curious as to why you opted for a debt management program through a credit counseling and debt management agency.

Much of what a debt management company does only involves contacting your creditors and negotiating alternative repayment plans with reduced interest rates and fees that you can actually do it yourself.

Most creditors will be eager to agree with lower repayments and reduced interest rates as they don’t want you to declare bankruptcy.”

I have been asked by a few US and UK blogging pals why I enrolled in a DMP while I could actually do the debt management myself.

First off, the banks and creditors in my country are more heartless and money sucking than those banks and creditors in the US or UK.

Before I enrolled in the free debt management program, I did call up or write in asking for alternative repayment plans with lower monthly payments and reduced interest rates. Unfortunately, some didn’t bother to reply while some came back with interest rates that I considered still very high.

Most creditors agreed to reduce the finance rate from 18% per annum to 15% or 13%. The lowest interest rate was 9% per annum and it’s from a bank that I had been making my monthly credit card payment more consistently.

Guess what the creditor counselor was able to negotiate with the banks? The interest rate was reduced by many points, between 6% and 7% by most of the banks and only one bank insisted on 13%.

The low interest rate is a huge help since I had been paying 18% or more, and had also been late on more accounts. The reduced APRs can save me thousands of dollars in long run.

As for lower monthly payments, NONE of the banks wanted to reduce the monthly payment from $150 or $200 to $50 or $60 when I did the debt management myself. But when it’s the credit counseling agency that did the negotiation on behalf of me, they were willing to reduce the monthly payments.

You may think that it’s because I pay enrollment fee and a monthly service fee to the agency that it’s easier to get things done. No. Free of charge.

I am in a free debt management program and agency set up by the government to provide financial counseling and debt management to individuals as well as financial education to help individuals take control of their financial situation.

In the US, you have non-profit and for-profit debt management companies that charge initial fee and a modestly monthly fee, but in my country there is only ONE credit counseling and debt management agency and its debt management program is free of charge.

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.

You may think that those who are jobless and can’t pay the bills are the ones who are keeping the phone lines ringing at credit counseling agencies across the nation. Well, not really. People who are still working but are caught in a debt spiral and unable to pay next month’s bills are also calling for help.

If you are on the verge of bankruptcy and you badly need to avoid filing for bankruptcy, make an appointment with a certified counselor from a reputable credit counseling company and let him help you review your financial situation.

A good credit counselor will take time to review your unsecured debt, such as credit cards, medical bills and personal loans, and secured debt, such as mortgages and car loans, as well as household expenses and personal income to find the best debt relief option that works best for you to pay off your debt.

Make sure you avoid debt management counselor who promises to enroll you in a debt management plan in less than 20 minutes! Remember, the less time spent with you, the less a credit counselor works in your best interest.

Most of the time, you don’t need a bankruptcy. There are debt relief programs such as debt consolidation, debt management programs or debt settlement plans to get you out of debt without declaring bankruptcy.

A debt management program, be it non-profit or for-profit, is designed to help you restructure your multiple payments into one smaller monthly payment that you can afford after your credit counselor negotiates with your creditors and establishes a debt repayment program.

The smaller monthly payment allows you to make the payments and not go into further debt or into bankruptcy.

You can be debt free with a debt management program without the terrible blemish of a bankruptcy on your record.

Note: I am a credit card debt woman who has been in a free debt management program since October 2008 and have felt the benefits of debt management program, so it’s easy for me to share with you about DMP more than debt consolidation and debt settlement plans.

To make sure that you don’t need any debt relief program or bankruptcy in future, start implementing debt management to properly manage your credit card debt.

Debt management is, simply put, a way of taking control of your debt and finances. You can manage the debt on your own with a little bit of effort without the help from a certified credit counselor.

The first step of debt management is to become familiar with your debt. Make a list of all your credit card accounts – how much is owed on each card and the amount of monthly payment.

Next, make a list of all your expenses and figure out where you can cut down and save money. There is also a need for you to keep track of your daily expenses so that you know where your money is going and see whether you can reduce the expenses in this area. Spending money without realizing what you are spending on and where your money is going to is the main reason you are knee deep in debt.

The next step is the most important and practical step – start making payments. Take the account with the smallest balance and pay as much as you can towards the balance each month while paying the minimum payments on all of your other accounts until the first account is paid off.

When the account is paid off, take the second lowest balance and repeat the process adding the amount that you paid towards the first account to the payment of the next account. You will repeat this process until you have all of your credit card accounts paid off.

Credit card debt management is not rocket science. It’s a simple process that requires discipline and determination in order to pay off credit card debt without having to enroll in a debt management program or declare bankruptcy.

In my opinion, people who don’t possess strong discipline and determination tend to end up enrolling themselves in debt management programs.

To be honest, I am a credit card debt woman who doesn’t have very strong discipline and determination. This explains why I am in need of a free debt management program to help me stop using credit cards totally and pay off my debt without harassment.

If you are severely behind in payments, no longer able to make more than the minimum on all your credit cards each month and being haunted by phone calls from banks, warning letters from creditors and legal notices from credit card companies, perhaps it’s time for you to consider enrolling in a debt management programme.

A debt management plan enables you to repay your total debt in more affordable installments over an agreed period of time.

Either your debt management program is free or requires a monthly fee, it depends whether the credit counseling agency is a non-profit or a business agency.

No matter which you choose, a free debt management program or a paid debt management program, you must be clear with the ins and outs or terms and conditions of the plan.

Taking the time to review every debt management program offered by a debt management company and comparing one credit counseling agency with another help you choose the right debt management service.

You should sign up for a debt management plan only after a certified credit counselor has spent time thoroughly reviewing your debt and income levels, and has negotiated arrangements and terms of paying back credit owed to various lending companies and banks.

Once you are in the debt management program, your monthly payment will be made into the credit counseling agency’s collection account and then the one monthly sum will be redistributed to your creditors.

If you are looking for one of the fastest and most effective ways to rid yourself of the credit card debt that has been weighting you down like a 500 pound gorilla, debt management program is definitely worth looking into.

Interest rate charges are the main hurdle that hinders you from paying off your credit card debt fast. Therefore the very first thing you should do in your attempt to reduce your credit card debt fast is to call each of your credit card company and negotiate a lower interest rate for each of your credit card.

Tell them that you have made up your mind to do credit card debt reduction and you have already sent some applications to other credit card companies that are offering a lower interest rate. You can tell them sincerely that you would stay with them only if they give you a lower interest rate.

Credit card companies are willing to negotiate the interest rates with you if you sincerely want to pay off your outstanding balance. Lower interest rates could mean that you can add the payment earmarked to settle the principal amount on your credit card bills.

Once you have successfully secured a lower interest rate for each of your credit card, pay your credit card debt persistently so that your debt is reduced and your monthly payment is also lower.

It’s easier to gain weight than to lose weight, likewise, it’s easier to get into debt than to get out of debt. It’s way too easy to accumulate debts than saving money to pay off the debts. But if you can follow the credit card debt reduction tips and ways on how to pay off your credit card debt with a little discipline, you will see your credit card debt reduction works.

Besides, it took years to accumulate the credit card debts. How could it be possible to eliminate the debts in a few months’ time?

Using a free calculator online, I tried to find out how long it’s going to take for me to pay off my credit card debts. I was shocked to find that in order to pay off $20,321 debts with an interest of 18% and monthly payment of $350, it’s going to take me 137 months or more than 11 years! It’s going to take 97 months or more than 6 years if I pay $400 monthly payment.

After one year of debt reduction, my credit card debts have dropped to $13,942. The other day, I used the same calculator again. To pay off $13,942 with an 18% interest and $350 monthly payment, 61 months or 5 years! Wow! What if I make $400 monthly payment? 50 months or more than 4 years.

What a relief that I have shortened the journey of credit card debt elimination! With renewed confidence, I made up my mind to achieve debt free living in 3 to 5 years’ time.

During the course of one year in paying off credit card debts, I have learned that discipline, determination and persistence are important. Without them, I wouldn’t have been able to pay down the debts from $20,321 to $13,942.