Debt Consolidation, Debt Management, and Debt Resolution: What’s the Difference?
Is your debt weighing you down? Whether you’re facing credit card, student loan, or other types of debt, it can dramatically affect your life. Debt can leave you feeling like you’re out of control – and that it’s impossible to pay all the bills you owe.
But there are options that can free you. If you want to get rid of your debt, then you can turn to debt programs to help you create a plan to get your finances back under control. And there are many different options available to help you.
The most common programs include debt consolidation, debt management, and debt resolution. These options can help you tackle any amount of debt. But they’re also very different in how they work. In order to understand them, you’ll need to know how they differ, and how they may be able to help your specific situation.
Since debt consolidation essentially combines all of your debt, it can make it easier to manage and pay.
You can use a debt consolidation loan for credit card debt, student loan debt, and even other types of debt. These loans are usually very beneficial, as they often feature lower interest rates, a lower monthly payment amount, and more favorable loan terms than your original debt.
And debt consolidation is incredibly simple. It can have a positive effect on your financial status, as it pays off your most pressing debts. A debt consolidation loan also makes it easier for you to stay out of debt going forward – you’ll only have one monthly payment, and you can pay down more of the loan’s principal rather than interest.
Pros of Debt Consolidation
- Works for anyone with multiple debts
- Stops collection agencies from calling and harassing you
- Can boost your credit score, as the principal is paid off faster
Debt management is a type of counseling program that’s offered by credit companies, debt resolution companies, and others who work with individuals in debt. In a debt management program, you’ll get counseling, advice, and immediate help from experts who can teach you how to better manage your finances.
Debt management is also called credit counseling. Your first step in a debt management program will be meeting with a counselor. This individual will assess your financial situation, then recommend steps forward. The process typically includes working with creditors to get lower interest rates, better repayment terms, or even lower monthly payments.
So, debt management programs can make it much easier to repay your debt. Sometimes, the process includes canceling some accounts, reducing your spending, or getting a reduced overall balance. It all depends – and can be customized – depending on what you need most.
Pros of Debt Management
- Consolidates multiple payments into one
- Can potentially reduce interest rates, fees, and even monthly payments
- Gives you an exact date for debt payoff and financial freedom
Debt resolution can help work with your creditors to potentially lower monthly payments and the total amount owed. Essentially, debt resolution experts work with your creditors or debt collectors to decide on an amount and monthly payments. The debt resolution company acts as a single point of contact for all your creditors. When the two sides agree, you’ll only be responsible for paying that number. So, this could be worth considering if you’re facing a lot of debt.
Pros of Debt Resolution
- Can help lower monthly payments
- Works directly with creditors on your behalf
- An alternative to bankruptcy
Which Debt Option is Right for You?
If you’re struggling with debt, then you need to know that you have options. You don’t have to live under the weight of high monthly payments, unbearable interest rates, and calls from collections. With the right option, you can get your debt under control and pay it off once and for all.