What is the Difference Between Debt Settlement and Debt Management, and Which Option is Right for You?

One of the most common difficulties in life is paying off debts. Settling debts has been a thorn in the sides of millions of people throughout the centuries, and there have always been unfortunate circumstances, including illnesses, accidents, and unemployment, that have made it a challenge for indebted individuals to get back in the black. If this sounds like you or someone that you know, do not despair! At Quality Credit Repair, we provide bankruptcy and debt counseling, among other excellent debt and credit services, that can help you take care of your debt and improve your credit score! 

There are many programs and counseling options available to help manage your credit cards and loans, but the two most popular options we offer are Debt Settlement and Debt Management. 

Debt Settlement

Debt settlement is an ideal way for you to pay off significant debt quickly. To get onto a settlement plan, you will need our experienced settlement experts to speak with your creditors and negotiate a favorable payment plan for a single lump sum that is usually less than what you officially owe. 


This is a good option for debts that total over $10,000 because the overwhelming, looming debt is terminated, the creditors get paid (albeit for a loss), and you might not have to declare bankruptcy if you were skirting around that undesirable solution. 


Unfortunately, debt settlements can go sour if creditors cannot agree to negotiate for a lump sum, or they could hit you with additional fees that could increase your debt rather than decrease it. Also, a debt settlement can directly impact your credit score. A “Settled” notation will appear in your credit history that can drop your credit score and indicate to creditors that you are a higher risk than other borrowers.

Debt Management

On the other hand, debt management plans involve consulting one of our financial counselors to design and follow through with a personalized budget. Similar to a settlement plan, your counselor will work directly with you and your creditors to determine an acceptable monthly payment plan to minimize fees and halt collections. They will also educate you on efficient and effective avenues for debt payment. Generally, debt management is the best option for most people whose debts total less than $10,000. 


The advantages of a debt management plan are easy to see: 

  • Your debt is consolidated, so you only need to worry about one monthly payment
  • Your debtors will get paid in full
  • A damaging “Settled” notation will not appear on your credit history
  • Making regular payments, while you are on the payment plan, can benefit your credit score.


Since the “Settled” notation does not show up on your credit history, your credit score will not drop. However, one of the stipulations for debt management is that you need to close all credit accounts, which can inadvertently hurt your score. Luckily, this is a temporary blip that can heal in time if regular payments are made. 

If you are struggling to get out of a seemingly impossible debt cycle, and you require debt counseling in Philadelphia, call us at Quality Credit Repair. We offer many options to help you leave the red once and for all!