Debt management vs debt cosolidation

Hi redlady,

Both debt management and debt consolidation aims at reducing your debts. Your financial coach will negotiate with your creditors in order to reduce your unsecured debts. You will have to make a single monthly payment to the debt consolidation company or the debt management company to pay off your creditors. Debt management is mainly offered by the credit counseling agencies whereas debt consolidation is offered by debt consolidation companies. Both of them have similar effects on your credit so you can go for anyone of them.

Thank you very much. Will the effect be positive or negative? If negative, what is the best way to reduce credit card debts without affecting your credit.

Hi redlady.

Paying off your debts with the help of a debt management or debt consolidation company will not have a negative effect on your credit report. However, irrespective of the fact that you go for debt management or consolidation, it would be written in your credit report that you are using a third party to pay off your mortgage. Though it won't hurt your credit, but it may become a bit difficult for you to qualify for new credit immediately.

Thanks

Hi redlady,

Each has its own (very different) pros and cons, and no-one should commit themselves before theyve spoken to a professional debt adviser who understands how all the different debt solutions work.