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Debt Consolidation 101

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What does the term "debt consolidation" mean?

Debt consolidation is a term used to describe a number of different debt repayment plans that allow you to get out of debt as quickly as possible. This is not to be confused with debt consolidation loans, which are quite different. You can learn more about the difference by reading our guide The Difference Between Debt Consolidation and Debt Consolidation Loans.

Debt consolidation with a reputable debt relief provider can help you work toward a debt-free life and a secure financial future.


What are the different types of debt consolidation plans?

The two most common types of debt consolidation plans are a Debt Management Plan (DMP) and a Debt Settlement Plan (DSP). There is also a third option which is used as a last resort: Bankruptcy.

Debt Management Plan
(DMP)

A DMP is a type of debt consolidation in which a debt relief provider works with you to consolidate all of your unsecured debts into a single monthly payment, with the goal of receiving better repayment terms from most creditors, such as lower interest rates and waived late fees. This allows you to pay off your debt faster than you could on your own paying the minimum monthly payments required by your creditors.

Most creditors view a DMP positively, since the customer is making an effort to take responsibility and pay off his or her debt in full.

Debt Settlement Plan
(DSP)

A DSP is a different type of debt consolidation in which a debt relief provider negotiates directly with your creditors on your behalf to accept payment of a percentage of your unsecured debt to satisfy your entire unsecured debt. You make monthly plan payments to the provider, which are held in an escrow account to build in value until your creditors agree to accept the providers' settlement offers.

This is an attractive alternative to bankruptcy for those who want to pay back at least a portion of their debt and cannot afford the DMP payment.

Bankruptcy

One other type of debt consolidation that is often considered as a last resort is bankruptcy. Bankruptcy involves a complex legal process created by Congress to provide relief from financial distress when you can no longer afford to pay your debts.

Depending on your circumstances, you may need to hire an attorney to get effective relief with bankruptcy.


How can CareOne Services, Inc. help me consolidate my debt?

Unlike other providers, we offer multiple debt consolidation options to help you become debt-free. CareOne is different from other debt relief providers because we recognize that you are distinctly different from other in-debt customers. We offer different debt relief solutions, so that our customers can easily find one that best fits their unique situation and do not feel forced into a solution that does not work for them.

We begin our relationship with a new customer by offering a free financial assessment in order to provide an objective recommendation as to which debt relief solution best suits their specific needs. Most of our customers are placed on either a Debt Management Plan (DMP) or a Debt Settlement Plan (DSP), depending upon their needs and the amount of debt they are able to repay. Whether enrolled in a DMP or DSP, we work with you by offering individualized and comprehensive support and customer service, as well as providing you with access to a variety of money management tools and resources, including our online community.


How do I know if I qualify for debt consolidation?

In order to qualify for debt consolidation with CareOne, you must have $2,500 or more in unsecured debt, at least two creditors that need to be repaid, and a source of income.

As you look into the debt consolidation process, you can feel confident that CareOne will work with you toward establishing a debt-free life. We take your success very seriously, and work hard to support and assist you as you gain financial independence. Please feel free to contact us at 1-800-348-5103 with any questions.


Glossary of Terms

Debt Consolidation:

Debt repayment plans that allow you to get out of debt as quickly as possible. CareOne offers two types of debt consolidation plans: a Debt Management Plan (DMP) or a Debt Settlement Plan (DSP).

Debt Management Plan (DMP):

An agreement between you and a debt relief provider to repay your unsecured debts in full over time in a single monthly payment that is distributed to your creditors by your DMP provider. In return, usually after three consecutive DMP payments, creditors begin offering benefits such as reduced interest rates and waived late and over-the-limit fees.

Debt Settlement Plan (DSP):

A debt relief provider negotiates directly with your creditors on your behalf to accept payment of a percentage of your unsecured debt to satisfy your entire unsecured debt. You make monthly plan payments to the provider, which are held in an escrow account to build in value until your creditors agree to accept settlement offers.

Bankruptcy:

A court proceeding in which a debtor is relieved of debt liability, in whole or in part, depending on the type of bankruptcy filed. There are two primary filings: a Chapter 7 bankruptcy declaration allows for the liquidation of assets and the discharge of most debts; a Chapter 13 bankruptcy allows a borrower with a steady income to pay off bills over a 36- to 60-month period.

Unsecured Debt:

Debt, such as most credit cards, that is not secured with collateral.

For a comprehensive list of financial terms, take a look at our glossary.


We take your success very seriously and work hard to support and assist you in selecting the plan that is right for you.

Please feel free to contact us at 1-800-348-5103 with any questions.

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