Are debt settlement and debt management the same thing and what are the differences between them?
Debt settlement and debt management are approaches people use when they find themselves in a spiralling debt they are struggling to repay. In the past credit was readily available, you could easily be accepted for a credit card, mortgage or personal loan. Many took advantage of this and took out loans they didn’t really need. Then a recession hit. Jobs were lost, redundancies made and recruitment hit a low. Money became tighter and people began struggling to repay debts, interest began to mount up, and what was once a fairly small debt soon began to grow into a much larger one.
If you find yourself in debt there are many avenues to follow for help and the task of finding the right one for you can seem a daunting one. Debt settlement and debt management are two options and the two can often be confused as being the same.
What is debt settlement?
Debt settlement is an approach used to reduce debt where the debtor and creditor agree on a reduced balance that will be regarded as paying the debt in full. This is also known as debt arbitration, debt negotiation and credit settlement. With debt settlement you make monthly payments to the creditor out of which a debt settlement company takes fees for any legal work or negotiation. Creditors, such as banks, credit card, loan companies and other creditors are writing off huge amounts of debt. Through debt settlement many are open to negotiations and willing to reduce debt by 50% or more, and allows you to spread payments out over a set term. For more information on debt settlement visit http://thedebtsreliefreviews.com/.
Many people choose debt settlement over debt management because they feel it will offer them more benefits.
What is debt management?
A debt management plan is provided by a debt management company who negotiates with creditors to change your debt repayment terms. Debt management is best suited to people who’s problem is likely to be short term. If the amount you owe is considered small creditors may ask you to try debt management first. In debt management a lower monthly repayment amount is negotiated and any further interest which might be added to your current debt is frozen.