Different Canadians use debt management plans as well as debt negotiations are both excellent solutions to provide them with bad credit help. These options carry their own pros and cons to cater to overwhelming debt in the most essential way.
We have curated this comprehensive guide has a detailed comparison between debt management plans vs. debt negotiations for settlement. Let’s get started!
Debt management plans
It is a planned assisted repayment for overdue and credit card debt bills, also called a debt consolidation plan. A credit counselling agency will help in your enrollment and the credit counsellor takes care of the monthly budget and a proper payment schedule for all debt repayments. He will also negotiate to lower down the interest charges but there is no reduction in the debt settlement or the amount you owe.
So, you just need to pay one monthly payment to your credit counselling agency who will further distribute it to the respective creditors till the full debt is cleared.
Debt negotiations for settlement
It is the way for all those who are unable to pay full debt amounts. It means that you will pay quite less than the amount you actually owe. A company is required that will negotiate with all creditors to make the payment quite low so that affording is simpler.
There are 2 ways to opt for it in Canada:
- For-profit agency: With lower success-rate, people tend to pay more than owing to the high fees mentioned in settlement agreement. Thus, they must be avoided to have the best settlement in no time.
- Consumer proposal: When a Licensed Insolvency Trustee files a debt settlement program, a consumer proposal is made. It is quite good as many creditors like the consumer proposal route which is best for debtors as well to handle debt effectively without any bankruptcy issues.
In this, a plethora of debt proposal settlements such as payday loans, credit card bills, student loans, as well as government taxes are included in this settlement procedure. However, a car loan as well as mortgage are exclusive of this arrangement.
What to Choose?
Be it debt management plans or debt negotiations for settlement, all your debt gets resolved in no time. Also, both safeguard you from being bankrupt and the programs tend to affect the credit report. They are quite convenient to manage with no more collection calls. All debts get cleared and you get insightful budget counselling as well as financial repair advice.
In case you have an assured income, a debt management plan is your perfect route while if you are completely stuck and can’t return any payment back, it is vital to have a word with a Licensed Insolvency Trustee and know further details about applying for a consumer proposal.
The Bottom Line
Now that you know about everything, it is time to opt for the right option that will aid in Debt settlement in no time. Credit720 is a leading financial service provider that aids in providing assistance for both debt management plans and debt negotiations for settlement.