Debt Management vs Debt Settlement
DMPs are 3-to-5 year programs. If you drop out of the program for any reason, you lose all the concessions creditors made for you on interest rate reduction and elimination of penalties for late fees
Compare & Evaluate
A Debt Management Plan (DMP) is an informal agreement that allows you to lower your monthly debt repayments to an amount that is more affordable for your circumstances. Your monthly debt management payment is determined by analyzing your income, expenses and financial priorities and seeing what money you have left over to pay to your creditors each month.
This debt payoff tool puts you on a path to pay off your debts by combining several debts into one monthly payment with a reduced interest rate. A financial counselor will meet with you to discuss your circumstance and arrange repayment to each of your creditors. The counselor will try to reorganize your debt, so it’s cost effective and more affordable. This type of debt relief often requires that you pay the entire amount owed. Having to pay back your entire balance owed usually requires higher monthly payments limiting your total monthly payment relief. Another downside to DMP is missing a payment can derail the plan and end your interest rate cuts causing you to have to restart your program from the beginning.
VS – DEBT SETTLEMENT OPTION
With the option of debt settlement, your debt settlement company negotiates with the lender to agree upon a settlement balance often less than what is owed, to repay the debt. This form of relief is less harmful to your credit score than bankruptcy and can offer some immediate relief from financial pressure drastically lowering your monthly payments.
Which debt relief option is best for you? For many, the answer is debt settlement. But is that the best option for relieving credit card debt? It’s important to review all your options and make the best decision based on your financial reality. Getting a Free Debt Analysis of your financial situation is important in understand which option might be best for you.