Will Debt Management Help You?
High interest credit cards and other unsecured debts, such as retail store cards, gas cards, medical bills, doctor bills and more, are causing Arkansas residents, and many people nationwide, to struggle financially. If you find yourself in this situation, you may be researching information regarding debt management programs, or debt management plans (DMPs) coordinated by credit counselors or debt counselors. In addition, you may also be considering alternative debt relief options such as debt settlement, debt negotiation, or even bankruptcy. Consumers must compare and contrast the differences between these debt relief alternatives and know the role they play in providing financial assistance for individuals and families in need.
Credit Counselors Customize Debt Management Plans
A debt management or credit counseling program is intended to combine or consolidate a consumer's high interest credit cards and other unsecured debts into a single, more manageable payment each month by taking advantage of the benefits of debt relief. Through such benefits as the waiving of late fees and penalties and lower interest rates, a credit counselor or debt counselor can design a debt management plan to help consumers save a significant amount of money and get out of debt at a quicker and more predictable pace.
If you are experiencing a financial hardship and need to explore your debt relief options, you can get your free debt relief evaluation and savings estimate at no obligation.
Debt management plans (DMPs) are unique to each individual or family. Generally, credit or debt counselors will interview individuals experiencing financial hardship and verify how much debt the consumer is facing. They will then gain a good understanding of the consumer's income level and how much money the consumers can actually set aside each month to pay down or pay off debts. Lastly, they will design a customized debt management plan that calls for the individual to refrain from using credit cards and make one consolidated payment each month to the credit counseling agency, which will then distribute the funds to creditors one by one. However, this plan cannot be established until it is submitted to creditors asking that they agree to extend the benefits of debt relief to the consumers in need. These benefits include:
- Lowering Monthly Payments
- Reducing Interest Rates
- Waiving of Late Fees and Penalties
- Consolidating or combining debts into a single, more manageable, monthly payment
- Helping you save substantial money and allowing you to get out of debt in less time than you could on your own if you were to continue paying only the monthly minimum month after month at higher interest rates.
Creditors are added to the debt management plan once they agree to the proposals submitted by credit or debt counselors. For creditors who do not agree to extend the benefits of debt relief, consumers are still obligated according to the original terms of their cardholder agreements.
If you need relief from credit cards or other unsecured debts, you can get your free debt relief evaluation and savings estimate at no obligation.
Credit counseling agencies utilizing certified credit counselors or debt counselors can also provide a variety of additional debt relief services including help with budgeting, developing good spending habits, financial education and more. Truly exceptional credit counseling agencies will always include a strong educational component to their program. Not only will they help the individual or family get out of debt, they will also help the consumer comprehend the root cause of their debt crisis and give them tools and knowledge to put an end to the cycle of debt.
Debt Management Saves Money Through Commitment
Credit counseling has helped many residents of Arkansas. While it is a tried and true method of debt relief, debt management also requires basic financial discipline and restraint to avoid using credit cards. Consumers must also make their consolidated monthly payments on time and make an overall commitment to remain on the plan's course. It normally takes three to five years to complete the program and realize the full benefits of debt relief. That may seem like a long time, but think about this: Isn't it worth taking a few years to get on track financially in order to save many years of stress and heartache?
The bottom line: Debt relief does not make debts magically go away, but it has provided welcome relief and helped countless individuals and families escape the debt treadmill and get on the path to a life of financial freedom!
Alternative Debt Relief Options Are Available
Debt relief programs have been known to help many Americans during financially challenging times, but some consumers may need more immediate relief, such as help paying for rent, utilities, child care or even buying groceries. The state of Arkansas has a variety of financial assistance programs available, such as the Low Income Home Energy Assistance Program (LIHEAP), Medicaid, ARKids First! Program, which provides affordable health insurance for children, and a variety of food assistance programs. To learn more, visit the state of Arkansas' official Benefits page.
Debt settlement is one alternative to debt management through credit counseling. Debt settlement or debt negotiation is more commonly utilized by individuals and families who have high interest, high-balance credit card debt and seriously considering bankruptcy. It is a more aggressive form of debt relief that has helped consumers get out of credit card debt faster, assuming the consumer can accumulate money in a "set aside" account which can later be used to extend a settlement offer to creditors. It's important to understand the difference between debt settlement and debt management: With debt management you are essentially paying off everything you owe, but saving money through much lower interest rates and a waiving of late fees and penalties. Debt settlement involves "settling" with credit card companies for much less than you currently owe.
It is widely known that credit card companies may want to "settle" with consumers. If credit card companies eventually decide to "sell off" accounts that are 60, 90 or more days late to a collection agency, creditors may get as little as 10 cents on the dollar. Under those circumstances, it is not surprising that credit card companies may be willing to accept a reasonable settlement offer made by you or by a debt settlement company negotiating on your behalf. It is important to recognize that money saved through credit card settlement is subject to federal taxation. In addition, when consumers default on their credit card agreements in order to set aside money in a settlement fund, creditors may threaten or take legal action. Finally, personal credit will most likely be negatively impacted by debt settlement, but the impact will be less serious than that of personal bankruptcy.
To compare your debt relief options and see how much you could save, take a moment to answer a few basic questions so that we can connect you to a BBB-accredited debt relief provider who may assist you. Before enrolling in any debt relief program, it is important to understand clearly how much debt relief can potentially save, how long it will take to see those savings, and the impact that any debt relief program could have on personal credit and taxes.
To learn what debt relief could do for you and get an estimate of how much you could potentially save – take a moment to answer a few questions online. Get your free debt relief analysis and savings estimate online.