Being buried under debt is no place for anyone. We all want resolution from our debt burdens and choosing the right plan is half the battle. Know the difference between debt resolution strategies and their benefits if you want to make an informed decision about your debts.
Debt Management Plan
Getting out of debt doesn’t always have to entail using a third party company or talking to your creditor. Many people can get out of debt on their own simply by developing a budget that strictly allocates payments to debt accounts. You may choose to live on beans and rice for a year while you pay as much towards all of your debt accounts or pay minimum balances on all but one account and attack that account directly, either way the plan must work for you. In order to be successful you must stay focused and committed to your debt management plan. Anyone with an unpredictable income or at risk of missing payments should not use debt management plans.
Negotiating with creditors directly can be a great way to lower your monthly payments and take the pressure off of your monthly budget. While credit negotiations may take longer to get out of debt, they can be much easier to manage and less intrusive than a settlement agreement or bankruptcy. Successful credit negotiations takes persistence when dealing with creditors. If you have a predictable income and can prove you are able to financially maintain a modified payment schedule, your chances of resolving debts with a negotiation are high.
Debt Settlement Agreement
Settling debts is usually one of the last options for most people and is considered after other methods have failed. While settling debts isn’t inherently bad they can be more difficult to obtain and may leave you with additional credit concerns at the end. However, if you cannot afford to repay the full amount of debt owed, a settlement agreement can help you resolve your debts and eliminate your delinquency status.