Debt Management Explained
If you’re struggling to make the minimum payments on your high-interest credit cards, you're not alone. Whether you're considering a debt management plan, a debt consolidation loan or even bankruptcy, the objective is the same. You need payment relief and you need it fast. The good new is that there are several options to choose from, that can help you accomplish your goals.
Debt consolidation loans are the preferred choice for most individuals burden by high interest rate credit cards. A consolidation loan can put you on the track to becoming debt free in as little as 3 years. However, you must have good to excellent credit in order to qualify. For those who less than perfect credit, there are other programs that can also give you payment relief. The first of these choices to consider is a debt management plan, sometimes labeled consumer credit counseling. This program does not have the adverse affects on your credit like other consolidation solutions, but can save you tons in interest and can lower your monthly payment. To learn more about your options, submit your information using the big green button to your left. Our experts are standing by and would love to go over your options in detail. Our service is free and there's never any obligation to proceed if you're not satisfied.
Consumer Credit Counseling and Debt Management Plans
A debt management plan is not a quick fix. Successfully reducing any type of debt, even at a reduced interest rate, takes time and discipline. Most debt management plans take up to three to five years to complete. This type of program does not affect your credit like a debt settlement program or filing bankruptcy. This solution does however allow you to keep your credit in good standing, but also benefit from a lower rate and faster payoff term.
The pros of entering into a debt management plan include
- A lower interest rate than you currently have with your creditors
- A set date in which you will be debt free, normally 3 to 5 years
- Your debts will be paid off in full, which means your creditors will be happy
- Your credit will remain in good standing versus alternatives options
What to Think About When Considering Debt Management
If you're considering a debt management plan, you must first complete a consumer credit counseling program. This is the same course required for those considering chapter 7 or 13 bankruptcy. Consumer credit counseling services will help assess your financial situation, and will help you establish a realistic monthly budget. A credit counseling service, will work directly with your creditors in an effort to lower your interest rates and monthly payment. The average rate reduction you can expect is between seven and nine percent. This means your accounts will be paid off faster versus sticking with your current rates and term. If your accounts are currently delinquent, a debt management company can also help bring your accounts back into good standing.
When enroll in a debt management plan, you will be required to make one fixed monthly payment directly to a consumer credit counseling agency. This payment is then distributed to your creditors on your behalf. This is where the program gets it’s name, the company is really managing your debt for you.
The Negatives of Debt Management
Debt management services can impact the way you look to potential creditors. When you enroll in credit counseling, you will be required to refrain from making any large purchases or racking up more debt. A small notation will be added to your credit report showing that you are working with a third party to help reduce you debt. This means taking out new loans while in the program can be very difficult. However once you complete the program, this notation will be removed and your credit will look as it did before you enrolled.
Life House Can Help You Compare Your Debt Consolidation Options
If you think a debt consolidation loan or management program may be right for you, give us a call or submit your information with us today. Our loan and credit experts can help you compare all your consolidation options side by side. There is never any obligation when speaking with us and our service is always free. This means there is nothing to lose in learning about your options.