Debt: Settle or Manage?
Part of the reason that so many people get confused with the debt relief process is because of the terminology that is used. It is very easy to get lost in financial terms and lose sight of what is actually happening with your finances. In fact, many debt relief professionals, albeit the more unscrupulous ones, will use this terminology to confuse you and make themselves sound smart so that they can extort you for more fees upfront.
You must have a working knowledge of the different sorts of debt relief programs that are available to you. Only then can you truly decide which program is best for you. We can start with the difference between settling debt and debt management.
Debt Settling
Settling debt is a program which involves your creditors and your personal management of your budget. In a debt settlement program, you are changing the actual parameters of your original agreement with your creditor or creditors. In many cases, the identity of your creditors might even change. This is most often done in debt consolidation loans, which is a subset of debt settlement programs that combines all of your loans into one package, sells them to a third-party creditor at a discount through debt settlement companies, and stretches out the payments over a longer period of time to give you more room within your monthly budget to pay.
However, the one notion that separates settling debt from debt management is that you will need a professional debt relief company to get in touch with your creditors to change the actual parameters of your loan agreement.
Debt Management
Debt management does not require the use of a professional third-party debt relief company. Debt management does not even require that you see anyone else’s help at all, although it can. Debt management simply means that you are in the process of reorganizing your own budget to pay down debt instead of ignoring it or maintaining it by paying off the minimum balances.
Debt management can be completely self inflicted, or you can hire an outside professional debt relief company to help you restructure your personal budget. If you do this, make sure to watch out for those debt management companies who will require an upfront. The going market practice is to take these only out of the percentage of monies that you save your clients, not to take fees up front before any true service has been rendered.
See Related: How Debt Negotiation Helps You to Pay Debts Off
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