subject: Differences Between Debt Settlement And Debt Management [print this page] Given the large amounts of unsecured debt that they are carrying, many consumers find themselves in a position where they need to make a choice among the many debt solutions available. For those with serious debt problems, the most likely choices are bankruptcy, debt settlement or debt management.
Bankruptcy should be the solution only when none of the others appear likely to extricate the consumer from his overwhelming debt, as its consequences to a credit report are so severe and long- lasting. The solutions that need to be examined very closely are debt settlement and debt management, as each will have its advantages in some cases relative to the other.
Usually, debt management is a more conservative choice for those whose finances are nearly manageable. Only moderate assistance is needed to make progress with paying down their debt. Debt settlement on the other hand is a more aggressive approach and more suitable for debt situations that are almost as extreme as ones that may require bankruptcy.
Depending on your debt situation, one debt relief option may be better than another. A debt scenario that would be best handled with debt management would be one that can be characterized by these aspects:
*The debt is not too overwhelming and is manageable, but it is still piling up
*All the different payments and due dates are becoming difficult to organize and handle each month
*You would greatly benefit from some moderate help with your interest rates
In contrast, here are some of the typical scenarios that are best handled by debt settlement:
*You're paying only the minimum monthly amounts on your high interest rate accounts
*The total monthly payments toward unsecured debt are simply too large; significantly lower payments are an absolute necessity to make any headway
Lastly, the associated impact to your credit should be a major factor to consider when contemplating the various credit card debt solutions. For example, debt settlement will result in significant credit damage, but for a limited amount of time. On the other hand, the severe credit score damage from bankruptcy can persist for up to 10 years or more.
