 TITLE: What Is Debt Settlement? CONTENT: What Is the Difference Between Debt Management and Debt Settlement?\n-------------------------------------------------------------------\nIf you're in dire financial straits and considering debt settlement, it's probably a good idea to investigate the similarly named but significantly different option called debt management.\nLike debt settlement companies, debt management programs (DMPs) can help you reorganize your finances, and the provider of a DMP can intervene with creditors on your behalf to help negotiate interest rate reductions, extended repayment time spans settlements. Unlike a debt settlement company, DMP providers have a goal of helping you pay your debt in full in a way that does minimal harm to your credit.\nAnother important distinction is that DMP providers are nonprofit companies, in contrast to for-profit debt settlement companies. That doesn't mean DMP services are free (although they may be if you meet certain income requirements), but it does mean DMP providers are less likely to charge high fees or to insist you use their services when other options are more viable.\nDebt management programs can take a toll on your credit as successful DMP participation can result in creditors closing your accounts. Whenever you close an account, it's important to understand how it will affect your credit utilization ratio, which measures the percentage of your total credit limit you're using. Credit utilization is the second-most important factor in your credit scores, and closing accounts may cause it to jump—potentially dinging your credit scores. Still, following a DMP repayment plan will likely leave your credit in a much better place than would debt settlement. END