Debt Management - Is It the Right Choice For You?

Debt Management plans offer credit counseling clients a different and new approach to tackle their finances. Finding out if a debt management plan is right for you can take some time. However looking into the pros and cons now will help you know if entering into a debt management plan is right for you.

Pros

Consolidated Monthly Payment ? Debt Management Plans consist of one monthly payment of an individual's credit card debt and other unsecured debt. Instead of several payments that are sent out monthly the credit counseling agency will receive your monthly payment and break it down to individual payments to all of your creditors.

Reduced Interest Rates ? Although some creditors have tightened what they will as far as an interest rate reduction for a client who is working with a debt management plan there are still some credit card companies that will reduce rates as far as charging no interest while on the debt management plan. However that is not the norm so it is reasonable to expect a slight decrease in interest rates and if you receive a larger break in rates that is more of a benefit to you.

Reduced Monthly Payments ? The days of a creditor reducing the monthly payment by half or more seem to be over, however several creditors reduce payments required by several percentage points for a customer of theirs that is enrolled into a debt management plan. This can help free up money to apply elsewhere such as a savings account or a retirement account.

Stopped Late & Over Limit Fees ? This is probably the most beneficial portion of the debt management plan for a credit counseling client who is behind with their payments to their creditors. The average late or over limit fee is about $29 so if you combine that with an average of six credit card accounts the savings on the fees alone could be up to $174 dollars for that example.

Customer Service ? Often overlooked by a person researching a debt management plan that is appropriate for them, customer service means that all of your credit card accounts should be accessible by the credit counseling agency you are working with and any questions you have regarding those accounts should be answered in a timely fashion. A well rounded customer service staff will go a long way as far as assisting you to get out of debt.

Con ?

Accounts Closed - All of your credit card accounts are closed to further charging. This can be initially looked at as a con by the consumer because it takes away their ability to charge, however in the long run this portion of the debt management plan should be viewed as a pro because it allows the client to rely more upon the income they are bringing in and will result in less overall debt that is accumulated while on the debt management program.

Debt management programs offer an array of help with little to consider as negative. The service is designed to assist anyone in need from freeing themselves of the burden of debt. One important factor is that a debt management plan has no negative impact on your credit score. This is according to Fair, Isaac the nation's credit scoring system, also known as the FICO Score.

These are a few points to consider in determining if a debt management plan is the best option for you. Contact an agency to determine if their plan can meet your needs.

Rick Munster is the Media Planner for Debt Reduction Services, http://www.debtreductionservices.com. He resides in Boise, ID. When he is not busy working with the media for his company, he enjoys writing, hiking and finding a good place to drop a line and do a little fishing.

---

4 Simple Ways to Solve Your Debt Burden

Getting Behind Getting behind on your debts owed can be... Read More

Bankruptcy Your Best Bet?

Filing bankruptcy is a common practice among the U.S. Over... Read More

Mandatory Credit Counseling for Those Considering Bankruptcy

Most Americans are aware of the sweeping changes in U.S.... Read More

Reduce Your Debt With These 5 Tips

It's never pleasant to realize that you're in financial hot... Read More

Credit Repair - Understanding The Basics

What is Credit?Credit means that you are using someone else's... Read More

Credit Card Debt: How to Get Rid of It

This method is simple, but requires some discipline.First, you have... Read More

New Bankruptcy Law ? Where?s the Consumer Protection?

On April 20, 2005, President Bush signed into law the... Read More

Establish Money Saving Goals For Added Success

Having something tangible to strive towards can work wonders for... Read More

The 7 Secrets to Getting?and Staying?Out of Debt

As vice president of the American Credit Foundation, a nonprofit... Read More

How to Negotiate Debt Settlement

People over extend themselves financially as a result of a... Read More

The 5 Secrets to Getting Out of Debt Fast

As they stare down at a teetering pile of bills,... Read More

Assess Your Financial Attitude and Eliminate Your Debt Forever

Want to know if your attitude towards your finances is... Read More

New Bankruptcy Law Makes it Harder to Stop Foreclosure

On October 17, 2005 President Bush's sweeping bankruptcy reform law... Read More

Bad Credit Home Loan To Get You Out Of Debt

A "bad credit home loan" can help you climb your... Read More

What Is A FICO Score?

Your FICO score or credit score as it's commonly called... Read More

Credit Counseling ? Signs That You May Need Help

Credit counseling is a viable option for those who are... Read More

Debt and Your Dreams

You may not realize what that credit card bill is... Read More

Bankruptcy - The New Scarlet Letter

Nathaniel Hawthorne's book The Scarlet Letter states in Chapter 2,... Read More

Bankruptcy 101

Bankruptcy still remains a mystery in the eyes of many... Read More

The Five Most Popular Questions About Bankruptcy

WILL MY CREDITORS STOP HARASSING ME?Yes, they will! By law,... Read More

Five Major Ways to Save Money

There are two main roads to improving your personal finances:... Read More

Bankruptcy: What You Need to Know

Personal bankruptcy is a legal way to give people with... Read More

Debt Elimination 3

Planning To Achieve Debt EliminationOnce you have started the process... Read More

Bankruptcy Interest Increases as Deadline Approaches

Congress recently passed sweeping legislation that will significantly reform American... Read More

Free Quick and Easy Money Saving Tips ? Part 1

With the high cost of gasoline and the amount of... Read More

Debt Consolidation and Personal Finances: Learn the Truth!

An inability to manage credit, growing debt and bankruptcy are... Read More

How Do You Spell Debt Relief?

Of all the problems possible in a marriage, finances cause... Read More

The Last Debt Solution Should Be Bankruptcy

A debt solution like bankruptcy should really only be used... Read More

Senate Passes New Bankruptcy Law

The United States Senate passed a law on March 10,... Read More

Debt Elimination 1

If you have multiple debts, you may well be wishing... Read More

Credit Counseling or Bankruptcy: Which is Best for You?

People often get to a place where they simply can't... Read More

New Bankruptcy Law Will Not Protect You from Identity Theft

Recently passed by Congress with overwhelming support, the oddly-named Bankruptcy... Read More

What is Debt Settlement and How Does it Work?

Debt settlement involves negotiating with a creditor or creditors to... Read More