Debt management is the solutions for managing your debt
- By: Ask Bill
When it comes to management of your debt, a host of debt management plans exist in the marketplace. Prior to embarking on a plan, it may be good to understand that there are a few questions that need answers to; answers that can help you assess your debt situation, its seriousness, its impact on your lifestyle going forward, and your ability to service restructured debts going forward. Can anyone take out a debt management plan? Usually there would be certain criteria that would have to be met in order to take out a debt management plan. This could include having debts over a certain amount, with a minimum of 3 different creditors and being able to pay a minimum amount each month which would be split between your creditors. In terms of fees relating to availing such services, typical no-fee companies offering a debt management plan would not take any of the money you were paying each month for them to split between your creditors. Therefore every penny you payout goes towards being one step closer to becoming debt free. They would assign case officers to work with you throughout your agreement period so as to help you tide over the difficulties relating to the structures and management review. Typical debt management plans last until you clear out all your debts. However if your circumstances get altered during this time you could talk with your case officer and you could resume normal repayments or even payoff your debt if you had the means to do so at this time.
Debt relief programs are designed specifically for people who can no longer afford their minimum monthly payments. The programs work to reduce the total amount of the debt and consolidate it into a single affordable monthly payment. Please bear in mind that debt management services are not for people who can afford their monthly payments but want to reduce payoffs so the credit can be paid off more quickly. Also, they are not for people who are already in the throes of bankruptcy. Debt management service program is usually handled through the creditors. The bank that holds the credit card in question will set the rate and the payoff amount. You would probably not have any say in the agreement. Each bank would offer its own terms for debt management service and the terms are usually not negotiable. If you are unable to manage the new monthly payment, you would usually be dropped from the program. A debt relief program like this can be helpful for people who are no longer able to make monthly payments due to high interest charges or late fees. It may be better to talk to the company first to see what sort of program they can offer you. In some cases, this may be all that is necessary to come out of a financial hole. In other cases, other types of debt management credit counseling may be required.
Debt consolidation can be applicable for a host of debts like Credit Card Debt, Department Store Card Debt, Catalogue Credit Card Debt, Magazine and Record Club Debt, Medical and Legal Bill Debt etc. Debt management consolidation should not be confused with debt settlement. In a consolidation, debt is not automatically paid off; rather multiple debts are combined/ restructured so as to reduce your overall payout. Responsibility for paying off the debt would still rest with you. While in debt settlement the particular debt in question is paid off. Debt consolidation therefore is not a loan. Instead, it helps you pay off your debt yourself, with very low interest rates. This would help you to take control of your finances and could restore your credit history over time. Debt consolidation is also not “credit repair”. “Credit Repair” companies claim that they can remove damaging information from your credit report. They usually ask for a fee up front, and then claim to work to improve your credit. Unlike debt consolidation, credit repair companies do not address the amount of your debt nor do they provide options on how to reduce that debt. “Credit repair” companies do not typically offer the consumer any educational information or counseling. According to the Federal Trade Commission (FTC), the fact is that nobody can legally remove negative truthful information from your credit report.
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