Debt Management - Is It the Right Choice For You? - Debt-Relief

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.

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