Debt Management

What is debt management?

Debt management is also known as debt consolidation or credit counseling. Some of the benefits of a debt management program include getting out of debt in four to five years, possibly lowering credit card interest rates and making a single monthly payment to a processing center. Creditors may remove late fees and bring past due accounts to a current status.

The monthly payment in a debt management program used to drop significantly, providing relief of burdensome unsecured debt.  This is no longer the case because most creditors have raised the minimum required monthly payment when participating in a program. Most creditors also no longer eliminate interest rates.  Debt management, nevertheless, remains a preferable option to debt negotiation because it has a more benign effect on a participant’s credit. Many debtors cannot afford the payment in a debt management program and opt for a debt negotiation plan despite the effect on their credit rating. Ultimately, the decision for one program over another is made according to what the debtor can afford.

When do you need a program?

  • You cannot manage multiple bills efficiently.
  • You’ve tried a self repayment plan but cannot overcome your problems.
  • You’re in financial crisis and need to get rid of  unsecured debts.
  • You want to lower the interest rate on your credit cards.