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What’s the Difference Between Debt Settlement and Debt Management?

Debt settlement and debt management may sound like the same thing, but there are many differences and it’s important for consumers to do the research so they can make an informed decision about their finances. Take a look at the chart below so a simple view of some differences. You can read more detail about them below.

Debt Management Plan

Debt Settlement Plan

Reduces APR

  • SurePath negotiates with creditors to lower interest rates (average 9.9%)

Reduces amount of total debt

  • Settlement company will attempt to negotiated a lowered payment amount to settle the debt

No penalty from FICO score

  • Improved payment history
  • Debts shown as paid in full

Lower FICO 45-160 Points

  • Poor payment history
  • Debts shown as settled

Allows mortgage/Car loans

  • Improved credit rating offers financing with lower APR’s

Difficult to obtain financing

  • If financing is offered, interest rates are generally much higher

Build up payment history

  • Client makes one monthly payment to SurePath.
  • SurePath makes on-time monthly payments to each creditor

Poor payment history

  • Consumer stops paying creditors and the settlement company holds client funds until they have saved enough to make an offer.


Debt settlement may help consumers get out of debt faster than a debt management plan but the severe impact to your credit score and report will cost consumers more money in the long run. Working with a legitimate nonprofit credit counseling agency will work to lower the consumer’s interest rates, lower monthly payment and help them to pay their debts in full leaving positive marks on their credit report and increasing their score.

The average FICO score upon completion of a debt management plan is 620 or higher. The average FICO score following debt settlement is 520-540 due to their payment history with severe past due balances and debts shown as “charged-off settled” or “paid settled”. Only the consumer knows what’s the best option for them so it’s important to know the differences between the two so they can make the best educated decision possible.

To find out if you could benefit from a debt management plan, start the online counseling process here or call a counselor at 877-615-7873 for your free counseling session.

SurePath Financial Solutions, a nonprofit organization, provides caring, innovative solutions that educate and empower consumers to successfully handle immediate financial challenges and plan for their future.

Please note that in May 2009, we changed our name from Consumer Credit Counseling Service (CCCS) to Surepath Financial Solutions. Same agency, different name. Learn more about us on Wiki.