Debt Management Programs

Debt Consolidation & Debt Management Programs

If you’re looking for some credit card or loan relief, then there are a bunch of probable answers that can help you. There are options that can be offered by banks or credit unions. Solutions such as debt consolidation and debt management programs

These two are some of the widely used loan relief methods. These two may initially look the same, but they actually offer different things to you as a customer. If you want to know the difference between these two loans, then dive into this article and discover more. For more clarification call our office and talk to one of our insolvency trustee Red Deer professionals.

Debt Consolidation

The debt consolidation is a kind of transaction wherein you take a big loan to address multiple small financial burdens, such as debts or liabilities. The lender of this type of loan is credit unions, banks, and other financial institutions capable of doing it. You will be given a time frame of three to five years to settle the debt consolidation. 

Here are the advantages of Debt Consolidation:

• You’ll be Granted Enough Funds to Pay All Your Debts

If the bank sees you fit of debt consolidation, then you already have your one-way ticket to pay or settle all your debts or liabilities. This is such an advantage as you will not be troubled by your various debts, as they will be paid instantly with debt consolidation. 

• Interest Rates Are Lower

With debt consolidation, you may actually save money. There are loan reliefs that contain high-interest rates, but debt consolidation is the complete opposite. It has a lower interest rate that is actually lower than your credit card rates. 

• Lower Monthly Payment

The borrowers or the debtors who are qualified for debt consolidation may lead to the lower monthly payment. The payment for the debt consolidation may be lower than the actual or original debt you are paying. 

Above are some of the advantages of debt consolidation. They look great, right? But, before you get right into it, you should also know what debt management is. One of our Red Deer insolvency trustees can be of help.

Debt Management Programs

In contrast to the concept of debt consolidation, debt management programs (DMP) utilizes the help of a credit counseling agency. The payment which is received by the agency per month is the fund used to pay your creditors at an agreed schedule. 

Here are the pros of debt management programs:

• Not a Loan

The idea of being not a loan is already a great thing. Not being a loan, you will not be opening another credit line, which can be very painful or burdensome to your pockets. 

• Working With Professionals

You will be guided by a Red Deer insolvency agency which is filled with professionals. They will be the ones to negotiate with relaxing fees and the possible lower interest rates on your behalf. 

• Financial Education

You will also be offered with a financial education by a credit counselor. Through this, you will be given knowledge on how to handle finances to avoid and prevent financial troubles or liabilities in the future and potentially avoid personal bankruptcy.

Regardless of the nature of your burdensome financial trouble, consulting an insolvency trustee Red Deer expert on which method to take is still the best. You may never know which of the two will be suited for you. So, before you go to any financial establishment to request debt consolidation or debt management programs, ask for recommendations or consultations first.