What to Consider In Debt Management Service

Debt management service or relief plans are not intended as an easy way to get out of debt.

Creditors will approve your participation in a debt management service if you are in need of assistance. It's important to understand that in exchange for the benefits a debt management service provides, your creditors: 

Will not allow you to incur additional unsecured debt while on the plan

Creditors close your accounts to keep you from charging additional purchases or cash advances. If you feel you can't live without a credit card, you might consider getting a secured credit card or a debit card to use while you're on the plan. You may be able to obtain a secured loan for a home or car while you are on the plan. Lenders appear increasingly understanding about credit problems, and many have established loan programs that you can qualify for after you have been on a debt relief plan for a minimum required amount.

May report your enrollment to the credit reporting agencies.

Creditors vary in how they report enrollment in a debt relief plan. Some may re-age your account, and report you current, some may report you're enrolled, and others may report you delinquent. If you proactively close your credit cards before enrolling, you can minimize the impact of a debt relief program on your credit report.

The Enrollment Process
 
Our Debt Relief Plan is one you may want to explore. The first step in the process is to provide personal information and complete a budget analysis to ensure this is the right program for you. Your creditor information is then entered, and a new monthly payment amount is calculated. If the payment plan works for your situation, all you do is sign a set of agreements that contain the detailed plan information. As soon as you sign your agreement, you'll be enrolled. Your creditors will receive a proposal asking them to confirm which benefits will be offered to you. Your creditors have the right to change the requested payment amount or decline participation in the program, but this doesn't happen very often. Remember, it may take three consecutive payments on the plan before your creditors apply benefits to your accounts.
 
When you're on the program, you'll receive monthly statements breaking down how your payments were disbursed to your creditors. You may also continue to receive statements from your creditors. It's important to review these every month to ensure your payments are credited appropriately, and you're reducing your debt as planned. As you pay off individual creditors, the money being paid to them is reallocated to your other creditors. Your monthly payment remains the same, and you'll be completely debt free in about five years.
 
Is it Right For You?
 
A Debt Management Service or Debt Relief plan is a good option if:
 
You can't pay more than the minimum amount due on your debts
Your account balances are increasing due to interest and other fees
You feel like you're falling further and further behind
For more information about budgeting and expense management, read our related articles listed in the Library.

In conclusion, you can have a professional service help you or you can set up your very own simple plan. It really is up to you. Whatever you decide to do please take action now.

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