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Debt Management Companies : A Short Guide

September 6th, 2010 |

Author: fts

If you find yourself getting into financial trouble, a debt management company could be the solution to keep you from falling into financial ruin. Professionals can often help you get your finances back on track and give you tools to keep you out of future trouble. If your income to debt ratio is too high, it’s time to start considering your options and save yourself from future financial headaches.

The role of a debt management company is to work with you and your creditors to make your debt more manageable and keep you from bankruptcy. Types of debt that qualify are medical bills, student loans, credit card bills, utility bills, IRS debt, and various other kinds of unsecured debt. They can also provide “credit repair” services, or help fix mistakes on your credit report.

A good debt management company will usually provide several services. They will examine your income and expenses and work with you to determine a livable budget while allocating a set amount to put in a special account each month that will go toward paying your debt. Counseling clients on income management is also a part of the services they offer. A “debt management plan,” or DMP, in writing should be provided to clients.

The debt management company will contact your creditors and work out a repayment plan. Creditors will often lower monthly payments, waive late fees, and lower interest rates to make it easier to repay your debt. The creditors are then paid monthly, semi-monthly, or even weekly from the debt repayment account.

Collection agencies and creditors will stop calling for payment and stop sending bills when you work with a debt management company. They know that by working with the debt management company, they are more likely to be paid, and are more than happy to make arrangements.

Be careful when choosing a debt management company. Make sure they are accredited or listed with the Better Business Bureau in the company’s area, and examine their fee structure and service agreement. Shop around and ask for referrals. Keep in mind that Not-For-Profit doesn’t mean the company doesn’t make money from your business; it only means they don’t pay taxes. Finding the right company can make debt management a relief rather than a nightmare.

Posted in Debt Relief Solutions |

Tags: debt, Debt Consolidation, Debt Management, Debt Relief, finance |

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Solutions For Getting Out Of Debt

September 5th, 2010 |

Author: fts

With the excess lending practices of the last few decades, before the recession caught up to us, many people have found themselves in deep waters financially. After all, it’s easy to spend money offered to you today that you hope to have in the future to pay back. But what if that money offered gets you so far into debt that you can’t see the light at the end of the tunnel? Whom can you turn to for help with your debt?

When it comes to handling your debt, you have options to help you create a repayment plan. You can go with debt consolidation, use a debt management company, or make your own arrangements for repayment. When considering those options, there are some things to keep in mind. Know your exact amount of debt and if it’s an amount you can handle by yourself. Decide if you are willing to pay for financial expertise and how much. Understand how it will affect your credit.

You will have to contact your creditors to make self-payment arrangements if you decide to go it alone. Most credit card companies and creditors are more than happy to work with you to make payment arrangements. They may even offer a settlement arrangement that could cut your bill in half. While this will negatively affect your credit score, it does have advantages. It can free up money to pay other debts and could save you from bankruptcy. If you do this for several of your debts, you could save thousands of dollars.

If you use a debt management company, they will work with you to come up with a debt management plan, or DPM, and they will negotiate with your creditors for a repayment plan. With them, you can determine a monthly amount that you can afford to pay that will go toward your debt. This amount may go into a special debt account or may go directly to the debt management company. If you decide to use a debt management company, make sure they are reputable and accredited. Carefully examine their fee structure so there are no surprises.

A debt settlement company will work out settlement arrangements with your creditors, and can usually negotiate a better settlement than you could on your own. The drawback is that they will generally charge a fee based on your amount of debt. When choosing a debt settlement company, try to find one that does not charge fees until the end of your debt repayment, one that can stop your creditors from calling you, and one that is accredited and listed with the Better Business Bureau.

Whatever method you decide to use, take steps to keep yourself from falling into the same spending habits in the future. While a debt management company can give you financial counseling, you can easily examine your own finances and discover many ways to keep you out of debt in the future.

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