What is the difference between debt settlement and debt management?

Debt settlement and debt management are two different ways of dealing with debt. Debt settlement is a process of negotiating with a creditor to reduce the amount of debt owed. It is usually done by a third-party negotiator who will negotiate with the creditor to reduce the debt to an amount that can be paid off in a reasonable amount of time. Debt settlement is only available in certain circumstances, such as if the borrower is unable to make payments on the debt, or if the creditor agrees to reduce the debt amount in exchange for a lump sum payment. Debt management, on the other hand, is a process of working with a credit counseling agency to create a repayment plan that allows the borrower to pay off their debt over a period of time. This includes making payments to the credit counseling agency, who then distributes the payments to creditors. This repayment plan allows the borrower to pay off their debt at a reduced amount. The main difference between debt settlement and debt management is that debt settlement is an agreement between a borrower and a creditor, while debt management is an arrangement between a borrower and a credit counseling agency. With debt settlement, the debtor is typically responsible for finding a third-party negotiator to negotiate with the creditor. With debt management, the credit counseling agency is responsible for creating a repayment plan that the borrower agrees to.

Related FAQs

What penalties or interest can creditors charge when settling debt?
Can I negotiate debt settlement with multiple creditors at once?
When is it best to pursue debt settlement?
Are there any drawbacks to settling a debt?
What documents do I need to provide during a debt settlement process?
What is the average time frame for debt settlement negotiations?
What happens to the debt that’s been settled?
Who should I contact to settle my debt?
Are there any services that can help me with a debt settlement?
What are the potential consequences of a failed debt settlement?

What is the difference between debt settlement and debt management?

Related FAQs

Related Blog Posts