When To Choose Debt Management Over Debt Settlement
Plenty of consumers are carrying significant amounts of debt and are increasingly exploring their debt relief options. There are numerous credit card debt solutions out there, but the most common choices range from bankruptcy, debt settlement, or debt management depending on the severity of the debt situation.
Bankruptcy is an extreme measure and should be the last resort only when all other options don’t appear to be sufficient enough to eliminate your debt. This is because the consequences of bankruptcy are damaging to your credit score and last a long time. Some other less severe solutions that should be considered are debt management and debt settlement. Each of these solutions has its pros and cons and will be appropriate for different situations.
The least extreme choice is debt management and will be effective for indebted consumers whose debts are still nearly manageable. With some moderate help, these consumers will be able to make headway towards paying down their debt. Debt settlement on the other hand is reserved for more severe debt problems and is a common approach for debt crises that fall just short of bankruptcy.
An indebted consumer can examine some specifics to determine which debt relief option is suitable for them. Let’s look at some characteristics of a situation that would seem to be best handled through debt management:
* The debt is not too overwhelming and is manageable, but it is still piling up
* The various due dates and payments each month are becoming challenging to organize and get a handle on
* You would greatly benefit from some moderate help with your interest rates
In contrast, here are some of the typical scenarios that are best handled by debt settlement:
* Only the minimum payments are being made monthly on accounts with high interest rates
* The minimum monthly payment amounts are becoming too hefty and greatly reduced payments are required to make any progress
Lastly, the associated impact to your credit should be a major factor to consider when contemplating the various credit card debt solutions. For example, debt settlement will result in significant credit damage, but for a limited amount of time. On the other hand, the severe credit score damage from bankruptcy can persist for up to 10 years or more.
Jackson Roberts is a debt analyst and an expert in the field of credit card debt relief. He has helped numerous indebted consumers become debt free through consumer credit counseling services.