It wasn't all that long ago that
American's faced great financial crisis. As a nation, we struggle
with debt, and it keeps us from achieving a better life. Debt
Education is here to help you change all that ... just ask!
REAL PEOPLE ... CARING ABOUT REAL
ISSUES
Debt Management Plan
A Debt Management Program (DMP) can help you regain control
of your financial situation and get out of debt. But, it requires
a commitment of dedication from you to make it work.
A Debt Management Program will get you back on track financially,
with regular payments, and should satisfy your creditors so they
will stop contacting you.
This type of debt management is for people who don't want to
get a consolidation loan
or don't feel debt consolidation is their best option, but can
pay their debt with some assistance and intervention.
Managing your debt has a couple of options in and of itself:
- Option one, you can seek the services of a Debt
Negotiation or Debt Settlement
company. These debt resolution companies are 100% employed by
you, and that means you are their client - not the banks. You
will pay a fee for the services of a debt settlement/negotiation
company.
- Option two is a credit-counseling agency who can work with
you and your creditors to form a plan to help get you out of
debt. Credit counseling agencies will claim
to be non-profits who work in your best interests. Very few
are legitimate non-profits. And, as for working in you best
interest, keep in mind that the credit counselors are paid by
the banking industry. You will be strongly urged to give a "donation"
to your credit counselor.
- Option three is Debt Elimination companies.
The debt elimination companies will tell you that you can default
on all your debt because they have found loophole in the laws
that will allow you simply walk away from your debt. You need
to walk away from this option. It will get you into a whole
world of financial trouble. If any of us try hard enough, we
can find loophole in most laws, but to impliment those loophole
would take a huge financial cash cow. If you had a cash cow,
you wouldn't be in debt. So, walk away from debt elimination
scams.
Let's take a look at how Debt Management works.
If you're falling behind on all of your bills. Each paycheck is
used to play catch up to credit card bills frought with late fees
and back payments, the future is looking grim. You have no idea
how you are going to handle your living expenses and debts, and
it's looking like you mightl loose everything.
You need to do a budget right away. You need to know your bottom
line (the difference between your income and expenses). A budget
should show that you can continue to pay your living expenses,
but need some help paying your debts in order to be qualify for
a debt settlement/
negotiation program. There MUST be a provable real
need to qualify.
Working with a credit counselor, on the other
hand, is designed to help you to prioritize and allocate your
money to pay for living expenses. Since they are paid by the banks,
it's fairly easy for them to work with your creditors to get you
a reduced interest rate.
A debt management program can help you:
• Get back on track with consistent payments
• Keep current on your bills
• Get you out of debt one month at a time
• Communicate with your creditors
• Work toward accomplishing your financial goals
Many debts can be included in a debt management program, including
most types of unsecured debt such as credit cards, medical bills,
department store cards, lines of credit, collection accounts and
taxes. Secured debts such as your house and car always stay in
your budget because you need them to live. You unsecured debt
stay seperate from your secured debt with either a debt settlement/negotiation
program or a credit counseling program
Most major creditors participate in consolidation programs. Banks,
credit unions, other lending institutions, department store cards,
hospitals, collection agencies and state and federal governments
are just a few examples.
How your credit gets effected depends upon which option you choose.
A Debt Management Program is designed to put you in a better financial
situation. Getting out of debt by making consistent payments will
get you back into a productive financial category and improve
your credit rating over time.
Read more about Debt
Settlement Or Negotiation to learn about the effects on your
credit.
Credit counseling has a limited effect on your credit, but keep
in mind that as many as 80% of the people who start credit counseling
will chose to drop out in the first three months because they
weren't able to do it alone. This is an viable option for someone
who's a strong-willed self-starter.
Fees can vary from agency-to-agency by a large margin. These
fees cover expenses undertaken on the client's behalf. For example,
when a program is started, information must be entered into a
database to properly administer the program. Legal letters must
be sent to all your creditors and an account managers to communicate
with your creditors.
With both debt settlement/ negotiation and credit
counseling, you usually will make one monthly payment
to the agency, and the agency distributes the money to your creditors.
As long as you make the scheduled payments, creditors agree to
deal with the agency and not contact you.
For credit counseling, in exchange for receiving
regular payments, many creditors are willing to reduce interest
rates, eliminate late fees and bring accounts current by re-aging.
That means the creditor classifies the account as being current
so it is no longer considered delinquent.
For debt settlement/ negotiation, in exchange
for receiving regular payments, there are no interest rates and
no late fees. However, the creditor will not classify the account
as being current, but will stop contacting you as long as payments
are being made.
For a debt management program to be successful you MUST
participate 100%. Your job is to make consistent payments
and maintain open communication with your chosen agency. While
you are making payments through a debt management program,
you cannot use credit or get new credit. "Credit" for
the purposes of a debt management program means
unsecured debt such as credit cards or retail cards. Make sure
you speak with your credit counselor before getting any type of
secured loan such as an auto or a mortgage loan.
Both credit counselors and debt
counselors will discuss your finances and debt options
with you. Most have a no obligation initial consulatation. Beware
the ones that don't!
There's a lot of information to read through on
the Debt Education website, but we feel this is extremely important
material. We strongly recommend that you bookmark
this page right now. This will allow you to read
at your leisure, and should you need to attend to other matters,
easily return back here at your convenience.
The Debt Education website was built for you. Please explore
our website. You'll find resources and information on virtually
every aspect of financial planning and money management. These
debt delp resources are designed to help you get out of debt and
stay out of debt. You can achieve financial independence.
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Debt Education PO Box 5156, Santa Cruz, CA 95063
