Credit Repair Las Vegas

What is the difference between a Debt Consolidation Loan and a Debt Management Program?

11/8/2017

Mike Lee

11/8/2017 12:25:11 pm

These types have two main differences. When enrolling in a debt management program, no loan is needed. The client agrees to pay the debt management company (or credit counseling agency) one payment that will be passed along to all accounts enrolled in the program. In contrast, a consolidation loan is offered through a company that specializes in this form of debt management. The client’s multiple accounts will be paid with this one loan and the client will then make a monthly payment to the company to repay the loan.

They also differ in that a debt management program is typically done through a nonprofit credit counseling agency and includes financial education to ensure the client is empowered to make healthier decisions for financial stability long after they finish repaying their debt.

Mike Lee

11/8/2017 12:49:36 pm

There are two kinds of debt consolidation. One type requires you to apply for and receive a consolidation loan to replace all past debts and bills. Your past creditors will be paid and you will now owe a monthly payment to repay your new balance with the consolidation company who supplied your loan.
The other type is carried out through a debt management program. In this scenario, an account will be created to keep track of all the balances owed to current creditors. Prior to beginning repayment, a credit counseling agency will negotiate with creditors to reduce interest rates and settle on manageable monthly payments. Once these are set, all payments are totaled and this amount is withdrawn from a client’s personal bank account as one single monthly payment. The debt management company will then pay all creditors listed on the account. In simple terms, a client will be consolidating multiple payments to creditors into one low monthly payment to be disbursed to creditors through this service.

Mike Lee

11/21/2017 03:03:25 pm

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What is the difference between a Debt Consolidation Loan and a Debt Management Program?

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