Debt Management Services vs Debt Consolidation Loans
August 13th, 2010 | 
Author: Discover the difference between a debt management service and a debt consolidation loan can be a little tricky. Although both are designed to reduce your payments and get out of debt, each goes about this task differently. It is important to understand the differences between the two services, so that you can make an informed choice about what would work best for you.
Debt Management Services
Debt management services offer several types of assistance and resources to help you reduce your debt. Typically these services are nonprofit and work with you to prepare a budget that will help you get out of debt and stay out of debt. They tend to be more concerned about educating the consumer in terms of management more than anything else. They usually offer counseling 12:59, finance classes, workshops, budgeting and bankruptcy counseling.
Your goal is to get you back on track financially. Some debt management services also work with your creditors to lower your monthly payments, interest rates lower, or even reduce or eliminate late fees and finance charges. Debt management companies not to lend the money to pay their credit cards with high interest, making many payments into one.
Consolidation Loan
A debt consolidation loan is a loan that is used to pay higher interest loans such as credit cards. It usually lowers your monthly payment and your interest rate, making it easier to pay off your debt more quickly. When you have more money to live on each month, which is can help keep you out of debt credit card charge.
Often a consolidation loan requires you to own a home, so the loan can be taken against the equity in the house. There are risks involved with putting your house to guarantee a loan for debt consolidation. If something unexpected happens to your income and you think you cannot make payment of the loan, you could lose your home. While this is an unlikely scenario, it is a possibility and should always be considered.
