How A Debt Management Program Can Get You Out Of Debt

September 23, 2011

Debt Management Program

If you have been thinking about participating in a debt management program, through a consolidation company or settlement service this is a must read  Many services advertise to you how great they can make your lives by customizing a debt management program for you, but do they really measure up? To get you familiar with debt management, we will introduce to you to the benefits and drawbacks of it so that you can get a bird’s eye view of what is really going on when it comes to participating in a debt management program.

debt management program

Debt Management Program Pros

Besides the fact that you will only have to pay one bill to one company, here are some of the benefits of using a debt managment program.

  • Lower interest rates and lower debt almost always come out of debt management. This through many ways liike it provides you with a secured loan you will pay on, or negotiates lower interests rates and lower debt totals with creditors among others. Debt managment programs can drop your interest as much as 10 percent or more. Lower interest rates also equate to lower monthly dues.
  • Debt management can also result in the re aging of your account that is delinquent, which is essentially reverting back your account to a time where you didn’t have any late fees or other fees. This can eliminate some or all the fees you have on your account.
  • Once you start your participation in a debt managment program, you will no longer receive any calls from creditors, as your debt managment company does all of the communication.
  • It prevents one from having to declare bankruptcy which will ruin credit scores for years.

CONS

  • When you pay off your debt on your debt management program, it shows up on your credit statement as a settlement and now a full pay off which can affect your credit score.
  • Some debt mangagement companies often times make late payments to creditors which results in late fees that you have to pay.
  • There is no guarantee that creditors will negotiate lower payment terms with debt management companies.
  • Smaller monthly payments are offered through a debt management program, which is done by extending to repayment term. This means being in debt longer as well as paying more interest. To avoid this, look for a company who allows you to pay more than the minimum without being hit with a fee, so you can pay more later when you can afford it.

How to Get the Best Debt Management Program

When looking for a good debt management program, a great tip to follow is to use a non profit organization. These organizations are funded by donations as well as from big businessses looking for writeoff, and have been known for lower fees and all together a better experience for clients. Be aware of organizations claiming they are non profit but aren’t. You can avoid these organizations all together by requestion proof of non profit which can be attained in the form of a (501(c)(3)) which is the proof of charitable status.

In conclusion, debt managment programs aren’t for everyone and should be used only for people who are having trouble paying their monthly payments, are making late payments or have stopped paying all together. Before starting a debt managment program, you can also contact your creditors and try to negotiate something that better suits your particular situation.

Category: Debt Management Program

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