Debt settlement can be done in numerous ways be it using the negotiation route or opting for debt management plan. They both offer bad credit help in Calgary, Alberta, Edmonton and Lloydminster. For all the people looking for apt differences between these two methods can get help from the below guide. So, let’s begin!
Debt settlement is done to lower the amount of loan payment that you owe than in debt management plan. In debt management plan, you are likely to pay overdue bills or/and credit card debts with the help of a credit counseling agency.
Prime similarities and differences
While both these options allow you to avoid bankruptcy, but the results of both routes are different. With a debt management plan, a consumer has to pay the whole debt in a limited amount of time. There is no reduction of the whole debt amount so choose any personal debt counseling services only when you are capable to repay the whole amount. However, with a debt settlement plan, you have to repay a small portion of the whole debt you owe which is calculated by analyzing your financial status.
With a debt management plan, you have to pay the whole debt and an additional 10% fee to the agency while with a debt settlement plan you only have to pay a portion of your debt with no additional fee. The installment is lower in both cases as compared to a debt consolidation loan.
Both the plans deal with unsecured debt, but with a debt settlement plan, you can work with a wider range of debts. The credit counseling agencies cannot deal with the government on your behalf so in case you are dealing with the tax you cannot work with DMP.
In both plans, you get aid if you are not able to repay the debt on your own. Here are some common advantages of both plans.
- You only have to make a single payment with both plans on a monthly basis.
- No more calls from creditors
- All the debt will vanish after the completion of the plan
- You have to pool all the unsecured debt together without leaving any creditors out.
- You have to surrender all your credit cards.
- You have to declare yourself insolvent before opting for the debt settlement route.
- No creditor can be compelled to participate. They can ask for immediate payments.
- Larger installment as you have to pay the whole debt.
The Bottom Line
Now that you have known about all the essential difference between debt negotiations for settlement and debt management plan, it is time to choose one of them suiting your situation and get one step closer to debt clearance. Credit720 can be your reliable solution to get best financial assistance to get rid of debts faster and lead a debt-free life.