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Are you debating between using debt management or debt settlement to ?
These options sound similar, but they're very different. One can help reduce your , while the other can create more trouble for you.
A from a nonprofit credit counseling agency rolls multiple debts into one with a single monthly payment and a lower interest rate. Repayment usually lasts three to five years, and you can’t generally open new lines of credit or use credit cards while on the plan.
These plans mainly address credit card debt and won’t cover other forms, such as tax debt, medical bills or student loans. You can sign up for a plan through a nonprofit credit counseling agency, and most are available over the phone or online.
is like playing a game of chicken with your creditors, but in the long run your finances always lose.
It works like this: You withhold payments until your account is severely delinquent, then ask the creditor to accept a smaller amount as full payment. The hope is that the creditor figures a lesser payment is better than none.
But settlement comes with a big downside: Your tank and you risk being . Plus, there’s no guarantee the creditor will agree to settle.
You can try or hire a company, but that brings further risk: The Federal Trade Commission recently ordered 11 such companies to stop marketing, saying they took millions of dollars from consumers and provided little benefit.