Comparing Debt Consolidation Loans, Credit Counseling, and Debt Management Plans

For many people dealing with debt, there are many options available for debt consolidation. The first option is bankruptcy, which many find to be the most unpleasant of all the options. Others prefer debt settlement, debt counseling or debt management.

Bankruptcy is a drastic measure that many would rather not take, but it is often an unavoidable step. When you file for bankruptcy, this not only takes away all your debt, but also your credit rating, preventing you from obtaining any kind of credit for many years. The effects of filing bankruptcy include severe effects on your credit score, which take years to repair. It can also result in an embarrassing public disclosure of your financial situation. Not to mention all the things you have lost forever, like your car, home, investments and even your name!

A much better alternative to bankruptcy is debt consolidation. When you use a debt consolidation service to pay off your current debt, you will only need one payment, one creditor and one interest rate. This makes paying off debt so much easier. It can also help you get that debt paid off faster and without as much embarrassment. Many veterans find themselves in debt as they adjust to life back at home and in many cases, they get overwhelmed with now needing to pay for car payments, home loans, and other bills like medical insurance. However it’s important to know that if they do find themselves in debt they’re not on their own, for example, the U.S. Department of Veteran Affairs offers veteran debt consolidation loans with lower interest rates and the ability to pay all their debts back with a monthly payment plan.

However, not everyone can qualify for debt consolidation loans. If you have a low credit score, you will most likely not qualify for debt consolidation loans. There are other options available though. One is a debt consolidation program, where you negotiate with your creditors to lower the amount you owe, in exchange for a lower monthly payment. There are also debt management plans, where you make a budget; meet with a counselor to help you set up a plan for managing your debt. You can also use a free debt consolidation kit to see if one of these might work for you.

Debt management plans tend to be a bit more affordable than the others, but they require a lot more in the way of work. The debt manager makes all of the arrangements for you to meet your payments. You would still be responsible for maintaining your accounts, but at a much lower level. You will be able to pay the company their fee every month, so the money you save by not having to pay so much interest can be quite a substantial amount.

As you can see, there are some disadvantages to each debt consolidation loan or plan. A debt management plan tends to be a better option for people who can’t qualify for debt consolidation loans. Also, if your debt is relatively recent, you may want to consider using a debt management plan. You’ll also want to talk to your credit counselor to see what kind of debt management plan they have available. There are many debt management companies out there, so you shouldn’t have any trouble finding a reputable company to work with you.