Apart from the interest rates, there are many other aspects which form the deciding factor while going in for a particular loan. Terms & conditions and loan availability are also important to the point that some people will grab any kind of loan which comes first, in cases of emergency. Hence, there is always a chance that an individual may opt for a loan which he or she wouldn’t have opted for, if better loan prospects were available during emergency purposes. This is where debt consolidation proves its mettle.

While, talking about debt management, it is a process wherein a third party, like a debt management services offering firm helps an individual to re-negotiate the terms, interest rates etc. with the creditor. This is only done when there is a considerable bad debt running for a client.

To get a better understanding of the debate – debt consolidation vs debt management, a point wise comparison list is compiled below:

• Debt consolidation is mostly done by the individual in question, while debt management is done mostly by firms offering debt management services. Debt management involves fees as the third party working on your behalf, strikes a debt management plan between you and the creditors. Debt consolidation normally does not have any middlemen, hence no subscription or commission or for that matter any kind of fees.
• While opting for debt consolidation, an individual takes a second or even multiple loans with lower interest rates to clear off the bad debt accumulated by the first loan, but debt management is a way to get lower interest rates for the same loan after proper negotiation in cases where the client is unable to pay the initial loan.
• As debt consolidation focuses on taking a new loan, the individual needs to have a very good credit score rating and even sufficient income aspects. But, debt management is a stark reality wherein due to non-payments; the clients are already bad on credit ratings.
• Comparing the 2 aspects in terms of possibilities, the chances of an individual to apply and get through a loan via the debt consolidation process is better than getting the rates, terms and conditions negotiated by a third party firm via debt management.
• Debt management plan/program and its details show up in the concerned credit report which has a very negative influence on the individual’s credit worthiness. Debt consolidation on the other hand doesn’t affect the credit rating and score. It works best when the individual has a decent source of income and needs to decrease the amount of interest rate for the loan he or she took in haste or as an emergency resort.
• Debt consolidation works even for multiple loans, like say an individual has 3 loans and he takes a debt consolidation loan (at a lower interest rate) to get even with the unnecessary spending on high interest rates. While, debt management can also be done for multiple loans, but these would lead to multiple entities, with multiple fees charged by firms.

Lastly, both these plans have their pros and cons, so one should put in a lot of thought before opting for any financial repair process.