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Are you feeling like you are not making progress in dealing with debt? If you’re feeling overwhelmed with trying to catch up, debt management and debt consolidation are two debt relief strategies that can help you get back on track.
However, debt management and debt consolidation are two different things. Which one will be the better way to get out of debt? Let’s take a look.
A debt management program is a way to eliminate your debts through working with a credit counseling agency. You make payments to the agency and they will connect with your creditors for every payment deadline.
The main problem with this is that you have to close all of your credit card accounts. It also lasts quite long, for about 3 to 5 years. During the first 8 to 10 months, your credit score will take a hit, but continuous monthly payments will help you to get back on building it up.
A good alternative strategy to try is by taking on a debt consolidation loan. This strategy involves taking out a loan with a large amount in order to pay off your other loans, especially those resulting from the use of numerous credit cards.
When you apply for a debt consolidation loan, you will be able to settle all of your existing loans and reduce them in one place. Since you only have to deal with one deadline, it will be easier for you to make payments on time and monitor your progress.
Most of the time, debt consolidation loans also offer lower interest rates, which will help you recover a lot. Furthermore, staying on time with your payments will improve your credibility, history, and credit utilization rates.
If you are determined to escape the continuous pressure of debt, both debt management plans and debt consolidation loans can help you get back on track. The question that you should ask instead is how strong your commitment is to improve your credit.
Decide on which debt relief option is better suited to your spending behavior and which one would work better with your current financial status.