Debt relief is a good opportunity for you to manage your financial problems and get rid of your debts. Even though such a program can be a lifesaver, it is still better to pay close attention to the options and figure out which one will work best for you before you make a final decision. Learn more about different credit card debt relief programs and their differences here.
Debt Management Program vs Debt Settlement Program: What’s the Difference?
So how are these two types of programs different? Let’s discuss the differences and similarities here:
- First of all, debt management programs help you pay back everything you’ve been charged, while debt settlement programs only help you out with a particular percentage.
- Debt management is often offered by nonprofit companies, while debt settlement is usually for-profit. This means that the services of debt settlement companies will be pricier. Websites like com/services/credit-card-debt/ offer many good and affordable solutions, so you can check them out as well.
- With DMP, credit card payments are reduced by around 30-50%. With the debt settlement program, this number will be around 50%. There is not much difference here.
- Fees for DSP are not applied until the debt is paid off. For the debt management program, the fee will be around 35$ per month for one person.
- All the penalty fees stop with the debt management program, and the interest fees are likely to be eliminated, while for the debt settlement program all kinds of interest charges and fees are not considered a factor when you settle.
- Debt settlement programs might take around 1-3 years to complete, and when it comes to the debt management program, those require around 36-60 payments.
- Debt management is better for those whose debts are still with the original creditors. If your debts are charged-off, it is better to go for debt settlement solutions.
- With DMP, you are more likely to get the assistance of a counselor who will also provide you with a few valuable tips and guidelines on how to deal with your current financial issues.
- Debt management programs might potentially improve hour credit score, while debt settlement program might have a bad impact on your credit score and credit history and it will be present on the report for at least seven years.
Choose the Right Debt Relief Program
There is a huge variety of services and companies that are ready to provide you with the necessary assistance. But you have to be careful when choosing to work with any kind of service: you should be completely sure about the trustworthiness of a company you plan on turning for help too. Don’t hesitate to talk to the reps of the service about your needs and financial situation. A reliable company will provide you with all the needed information you request as well as tips on how to handle your problems effectively.