Debt Management Program Versus Debt Settlement Plan – Which Is Better?
Have your debts overwhelmed you and you have no idea what to do? Don’t worry there are two debt relief options immediately available to you. You probably don’t want to have to choose either of the choices in your lifetime, but let’s take a look at them anyway.
Debt management programs essentially do what they say. They 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 these programs because it means they will get less money. Most will work with major management groups.
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 years. Maybe longer, it depends on the size of your debts.
Debt settlement is where they take all of your debts and make you settle for a large lump sum. This makes it so they will stop adding interest fees but you need to be able to afford the giant lump sum. This process can 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.
Making either of these choices is taxing on an individual. If you are wondering how to avoid this the answer is simple, just keep your bills paid on time. Even though bad things do have a tendency to happen when we are least prepared, just keep in mind you do have these two choices if things get really bad.
The primary difference between these two programs is what the end up doing to your credit. Debt management program usually leaves you in better shape with an easier time of restoring your credit while debt settlement usually leaves your credit in a blasted wreck and takes a while to restore. Make sure to think carefully before you choose.
In closing the choice of either a debt management program versus debt settlement is a hard choice to make. Neither of these will cross a person’s mind unless they are in some kind of financial trouble.
Not sure if you should seek help from credit counseling, debt consolidation, debt management program, or debt settlement plan? Then, read my debt management program progress and others’ experiences in using different debt relief options.
Article Source:http://www.articlesbase.com/personal-finance-articles/debt-management-program-versus-debt-settlement-plan-which-is-better-1036912.html
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