A Debt Management Plan (Also known as: Debt Consolidation, Credit Counseling, and Credit Card Consolidation) is a more traditional debt repayment option. With a Debt Management Plan, you pay back 100% of your principal debt with a large reduction in interest rates. Interest is commonly reduced by about half or more of what you are currently paying. You become free of debt in as little as 3 to 5 years.
In Debt Settlement, the total amount of principal debt that you owe can be reduced by approximately 40-60% of the original debt.
Debt Settlement's usual approach is for you to completely stop paying your creditors. This typically results in a judgment or garnishment. Imagine the effect that has on your credit report and scores! Beware of these types of companies as most of them have an "F" rating with the Better Business Bureau.
The ONLY time Debt Settlement is a successful option is when you are behind and you have a lump sum of money available to you.
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