It’s easy to confuse nonprofit debt management plans with other debt solutions such as debt settlement. But they are actually quite different. Debt management plans are a practical, affordable option for those who would like to pay off their credit card debt in five years or less.
Take a look at the differences between nonprofit debt management plans and other debt solutions.
Nonprofit Debt Management – A debt management plan helps you get out of debt by reducing the length of time it takes to repay credit card debt while lowering the total amount of interest paid. A certified credit counselor works with your creditors to eliminate collection calls, and stop late fees and over-limit fees. You’ll pay one convenient monthly payment to the nonprofit credit counseling agency each month, which is distributed to creditors on your behalf.
Debt Settlement – Although they sound similar, debt settlement and debt management are not the same thing. Debt settlement involves paying only a portion of the total balance due, and typically is not an option unless an account is more than 90 days past due. At this point, it’s already damaged your credit. And settling a debt rather than paying in full can have a further negative effect. Additionally, you may be responsible to pay taxes on the settled amount, which could end up costing you even more in the end.
Credit Repair – When searching for help with debt, you may run across companies who offer credit repair. Credit repair companies work to have negative information removed from credit reports. Fees can be quite high and the ‘repair’ is often temporary, since permanent removal of the negative information isn’t guaranteed.
Nonprofit debt management plans are an excellent option for consumers who want to pay off credit card debt in five years or less. You’ll want to work with a nonprofit credit counseling agency, such as Take Charge America, who is committed to providing ongoing financial education as part of the debt management process.