What to Look For When Selecting Debt Management Companies

Alongside the ongoing collapse of the American economy, with lender after lender filing for bankruptcy protection and real estate markets crumbling at the nation’s feet, there is, at least, one industry that continues to rise in both popularity and productivity. Yes, our debt management firms have shown exponential growth over the last few years, and, with the larger financial picture unlikely to change any time soon, consumers shall continue to flock to every company that promises a reduction of payments and interest rates for the debts that accumulated back in the good old days. You are, we’re sure, at least familiar with the notion of debt management.

From billboards to television commercials to soft-sell magazine articles highlighting the various approaches, debt management has become a buzz word for all segments of the economy whether or not you’re trying to get out of a negative equity residence or simply trying to erase a few thousand dollars of credit card debt whose minimum payments you can no longer maintain. In the greater sense, for most borrowers, undertaking the process of debt management will be to your advantage regardless of the path you choose. While there are obvious drawbacks to Consumer Credit Counseling (FICO score wreckage resembling that of Chapter 7 bankruptcies) and home equity debt consolidation (incredibly dangerous in a time of tumbling property values), there remains a number of debt management forms – debt settlement negotiation, which can reduce borrowers’ balances by as much as fifty percent with a few phone calls for relatively low cost to the pocketbook or credit report, chief among them – that have demonstrable value to even the most dubious debtor.

Of course, at the same point, for every good and legitimate debt management firm, there are others who are simply out to make the fast buck regardless of their client’s well being. In this article, we would like purely to highlight some of the more egregious complaints our correspondents have reported when attempting debt consolidation with the hope that you would be able to sniff out a malfeasant business and select one that truly has you and your family’s best interests in heart. Obviously, there is a good deal more investigation that needs to be done well before you even meet with a specific company.

Considering all of the different approaches to debt management available, you have to make sure that you have a full and complete grasp of each one, from debt settlement to Consumer Credit Counseling and beyond, before even looking at the different possibilities in your area – or, these days, on the internet. Ask yourself: is it possible to pay off your credit cards and unsecured loans through traditional means in a reasonable amount of time? How important will your credit rating be to your plans over the near future? Do you plan to buy a house or refinance your current residence in the next few years? Do you want (or, even, need) to maintain some lines of credit available during the process of debt management? These are questions for another essay, we shan’t possibly have the space to outline every potentiality (nor, obviously, could we pretend to know your own specific financial scenario), but you can do so much of this sort of fact finding with just a little bit of research about debt management and all that the programs entail.

Still, once you have decided upon a specific approach to follow, there are a number of warning signs to look out for when selecting your debt management company, and we would merely like to delve into a few of these threats. For one instance, you should always ensure that whichever firm you have considered working with requires all of the following data before they offer any sort of estimate: identity of each lender, the interest rates of each accounts, minimum (and, under unusual circumstances, maximum) payments requested from each lender, past and current late payments as noted (or about to be noted) upon your credit report, and, as well, any significant account activity which may include balance transfers or relatively greater purchases in recent years. If the company happily provides a quote without such information, this should seem highly suspicious to the borrower.

Even after a cursory analysis of the household’s financial information, legitimate debt management companies should be loathe to give much more than the vaguest of quotes – certainly not a complete good faith estimate – and, whenever businesses blithely pretend to know how much their services will cost before looking closely at all possible difficulties – red flags should dance before borrowers’ eyes. By all means, if the debt management professional begins to talk about your eventual payments and what they would hope the interest rates would be during the initial consultation, feel free to gather your paperwork and walk away.

At the same point, of course, while it is necessary to offer this information to your prospective debt management company during the application process, one shouldn’t just hand out your most personal financial data before making absolutely certain that the company is one to be trusted. Even beyond the question of honesty – as happens, many debt management companies will share such information with bill collectors and predatory credit card companies all too ready to shove near fraudulent balance transfer offers down the debtors’ metaphorical throats – there’s a separate issue of experience and competence.

Your authors have known overworked debt management companies that simply threw out their past files into recycling bins outside the office! In this era of widespread identity theft, keeping such information private couldn’t be of more grave seriousness, and you simply have to make sure that your social security number and similar data will be properly disposed of. In fact, you should have the debt management professional you consult with give you assurances in writing about their organizational guidelines regarding the destruction and confidentiality policies regarding client documents before handing anything over. For obvious reasons, your debt management partners will need to trade this information with the lenders that they will need to deal with over the course of debt negotiation, but representatives of those credit card companies should be the ONLY ones to be given access to such incredibly sensitive data.

Also, on the topic of documents, prior to giving the debt management company your paperwork – or, considering the FICO score’s reduced every time your credit report is checked, even your social security number – do try to ascertain some notion of their best guess, however vague, as to the costs expected. Once again, the more legitimate companies shall be far more reticent to provide any sort of estimate without detailed analysis of your accounts, but, if you give a close idea of the amounts of the balances as well as your FICO score from each of the three main bureaus, they should at least be willing to come to some theoretical notion of the potential expense. Much can be learned from the charge requested for the initial consultation with the debt management counselor.

While it shouldn’t be seen as odd for some negligible fee to be attached to the first meeting – expect something around twenty five to seventy five dollars unless the loan balances under contention are truly gargantuan – anything beyond a hundred dollars should be seen as a warning sign. As we continue to remind, you should also make sure to have written documentation detailing precisely what you will receive for this fee, and you should ask whether or not there will be further charges for enrollment or admittance or seemingly superfluous fees. Any debt management company that has several charges for essentially the same task will not stop there, after all. If you fall for these charges, lord only knows what they might try next. Furthermore, while that initial payment may be necessary up front (if they didn’t charge anything, debt management companies would be besieged by skinflints pressing they for advice or information free of charge), additional fees asked by the company should be able to be built into the debt consolidation process so that you would never have to pay one lump sum all at once.

Speaking of the payment terms, they (it should go without saying) depend almost completely upon both the total amount of the credit card balances and the specific debt management approach that you end up selecting. The approach really does matter. Debt settlement rarely allows borrowers to maintain payment schedules lasting longer than five years while home equity loans can continue racking up compound interest for decades and Consumer Credit Counseling, as with so many things, remains eternally malleable to the borrower’s demands. However, you should be able to figure out what the debt management company costs will be each month before agreeing to their program. Obviously, you have to expect that their will be some sort of monthly administrative charge – this is how the companies make their money – but it should not be any higher than ten dollar per month.

Many of the less reputable debt management firms attempt to hide redundant charges within the monthly payments, and some of them add on an additional annual expense for exactly the same efforts! Not to repeat ourselves, but this is why a close perusal of the final good faith estimate is such an integral part of choosing the debt management companies. If it’s not within your capacity or if you haven’t the time (since so many borrowers who need to consider debt management are holding down two jobs), ask any of your friends or family who may be more experienced with financial matters or who have an accountant upon retainer if they could take a look to weed out such unnecessary fees. Sometimes a creditor will even insist upon proof of payment to the debt management firm in question before they undertake serious negotiations, but, as with everything, this should be verified beyond possible dispute.

While on the subject of monthly payments, another element of debt management that many borrowers unused to dealing with this sort of financing tend to ignore revolves around the lenders themselves. Remember, you are entrusting all payments to be made – which, in essence, means entrusting your credit rating for years to come – to the debt management firm, and it’s of the greatest importance that they understand and acknowledge their responsibility. Particularly lax or incompetent debt management companies (or, even, those companies that themselves have liquidity problems) have been known to delay the payments to creditors that they have been charged to transfer out.

After debt management, you will be sending the checks to the management company, but, in many instances, you will still be held liable by the credit card companies for the obligations that you originally signed on for. Make sure that you understand precisely your debt management partners’ plans for timely remuneration of the credit card companies and – we apologize for the repetition but this cannot be underlined sufficiently; too many households have been lost to oral agreements – get everything down on paper. For that matter, force the debt management company to send along a notice each month that records their payments to the various lenders alongside some tracking system available over the internet. As ever, should the debt management professional suddenly blanch or in any way act as if this is outside the bounds of his responsibility to his client, feel more than free to walk out the door. Indeed, feel that it is your duty to remind the company about industry standards.

As to the payments themselves, we fall into another grey area. So much of debt management depends upon a knowledge of the individual situation that it becomes increasingly hard to remotely advise borrowers as to what sort of plan or program would be to their best advantage. However, regardless of the household’s debt situation, some aspects are not relative. While the amount of monthly payments suggested by the debt management specialist that you are working with may, indeed, jump up or down by thousands of dollars when put into comparison to your income and debt load, the actual ratios remain stagnant. No matter what, there needs to be costs of living built into the structure of your debt repayment, and, even with a strict budgetary policy that forgoes previous liberties, some expenses are bound to be constant.

Your debt management professional must be able – and, more to the point, willing – to adapt the overall goals you must both be striving towards (to eliminate consumer debt as quickly as possibly so as to reduce the potential effects of compound interest) with the sad realities (day to day household costs plus some money set aside each month for savings). While you do not want to work with a debt management professional that blithely allows your debts to continue for longer than necessary to assure himself and his company of continued rewards, you also don’t want to be at the mercy of any debt specialist so obsessive about debt relief and so absent empathy about the actual plight of his clients that they suffer unnecessarily to save a few bucks over the course of the program.

Put plain, you need a debt management firm that understands you and your family’s current living conditions as well as your eventual long term goals and aspirations – presuming a debt-free existence to be paramount among them. Much as you should look twice at any debt management plan that features suspiciously low monthly payments, do not immediately trust another company simply because the payments are markedly higher no matter how quickly they promise you would be able to repay all current obligations. There’s far more to debt management, at the end of the day, than simply eliminating what debts you have this very moment, and budgets set by debt management professionals that clearly have no idea and less interest as to your actual expenses just won’t be feasible over the long haul.

There are so very many different debt management programs and debt counselors with which you may work when attempting to solve this problem that it would be foolish to fall for the first relatively decent offer and it would be something worse to allow yourself to be tempted by the budgetary elasticity of low payments OR the guild-ridden asceticism that too-high payments indulge. Ask around! Check out the competitors! As long as you have documented figures about your current credit accounts as well as your three FICO scores (or, better, if you have access, the actual credit reports), it is worth the time to talk to even a dozen debt management shops in order to make sure you’re getting the deal that’s best for your family’s finances. Debt management is a sparkling new industry, and you can’t simply hope to follow the path or your grandfather as you might for a home loan or mechanic. Research must be done and done seriously. This isn’t like cramming for a test or trying to brave your way through a DMV exam. Your selection of debt management specialists will impact your household’s next decade for better or, as too often happens, for worse.

This article, by no means, should be seen as the only resource available for your household. There are an infinite number of debt management scenarios to be considered and an equal amount of potential landmines. Much as your local Chamber of Commerce and Better Business Bureau largely survive upon paid membership, they do – grudgingly, it should be remembered – keep a backlog of prior complaints from unhappy clients, and it should not be that difficult to request information about any company you have been considering. Also: see if the firm of choice maintains any professional affiliations. Many of the more legitimate Consumer Credit Counseling outfits have recently been accredited by the government following the 2005 changes to the United States Bankruptcy Code (all those who declare bankruptcy must now, on their own dime, take absolutely needless courses on debt management; yet another way in which the congressional alterations of Chapter 7 makes the bankruptcy alternative less palatable for ordinary consumers) and that’s one way to ensure at least some competence and experience from the organization.

Debt settlement negotiators, on the other hand, must be certified by a national board, and, should you go through that (ever more popular, with good reason) route, make absolutely sure they can prove such certification. Nevertheless, as with so much involving debt management, the final decision rests with you. Nobody can hold your hand, least of all an on-line article, when deciding upon the men or women who shall shape your financial future. Study all the information that you can, take a hard look at your own finances, and, at the end, remember that the debt management specialist you end up with will be tied to you and your family’s finances for a long time to come. With that understood, choose your debt management solution accordingly.

The Advantages of Debt Management For Erasing Credit Card Debt

Countless consumers across the nation have been harried of late by the ravages of credit card debts, and many Americans are desperate for any kind of relief. As they seek to take care of a seemingly unending string of bills, more and more Americans are turning to debt management solutions to provide some help in ridding themselves of the burden of credit card debt. Now, as you probably know, debt management can refer to a whole host of different techniques with which borrowers and their debt manager professionals may try to take charge of their household economics. In this article, we will briefly run down some of the more popular methods for debt management. It is important to remember, however, that this is only the tip of the iceberg as regards the information every borrower must know before they enter the world of debt management. Much as it may help to read some cursory explanations of the various alternatives available, smart debtors must investigate every single option before they begin to alleviate their own financial difficulties.

Whatever Happened To Bankruptcy Protection?

For the entire lives of virtually all Americans, bankruptcy has existed as the final solution to unchecked debts. However, over the past generation, more and more changes to the United States Bankruptcy Code have seriously weakened the protections previously available to all consumers. About twenty years ago, the first blow to bankruptcy protection was struck when the congress removed student loans (both public and private) from the type of debts that bankruptcy could effectively deal with. Then, in 2005, pressured both by lobbyists from the multinational credit card conglomerates and their own Internal Revenue Service, the government drastically changed nearly everything about Chapter 7 protection as it was formerly understood. Bankruptcy was never a glamorous choice – indeed, it has always been considered disastrous for credit and embarrassing to personal reputation. Nevertheless, American borrowers always assumed that bankruptcy would remain a final resort for debt management and that, sadly, is no longer the case.

One thing, however, has not changed. Bankruptcy still has irrevocably (at least, for up to a decade) ruinous consequences as to FICO scores and overall credit ratings. If anything, the modern breed of debt analysts who have been specifically trained to look over credit reports for findings above and beyond the Fair-Isaacs score will treat borrowers who have declared bankruptcy even worse. These sorts of notes can have repercussions for debt management that linger well past the bankruptcy has been cleared. In even the best of situations, twenty four months will have to pass after the formal discharge before consumers would qualify for new loans or new credit accounts, and, even then, those that have declared bankruptcy will face interest rates beyond horrendous. It has always been a difficult road to pursue – taking into account the loss of assets and credit privileges that Chapter 7 associations usually necessitate – but nowadays it is almost unthinkable for borrowers with any other choice.

While recognizing all of the negative consequences regarding credit that follow borrowers who have filed for bankruptcy, it is still not surprising why the notion of Chapter 7 protection yet appeals to so many Americans. Even taking into account the not inconsiderable costs that ever more expensive bankruptcy attorneys will charge (and even for the initial consultation!), the temptations to eliminate most unsecured debts have an obvious attraction. As has been said, some debts are immune to bankruptcy proceedings. Student loans would not be able to be included under Chapter 7. Most tax liens, familial support, funds owed from criminal proceedings, and assorted other debts are also ignored. Still, to be sure, Chapter 7 bankruptcy protection, when successfully declared, can be a powerful debt elimination tool even though, under the current guidelines, borrowers would risk the loss of most salable assets or possessions. However, with these new strictures in place, borrowers would only qualify for the Chapter 7 program if they earned less than half of the average income of their state of residence as determined by an arbitrarily chosen period. Not only will bankruptcy protection be more corrosive and eliminate fewer debts than before, as things stand many debtors might not even to be able to declare!

Spend Wisely!

Of course, for debt management to have any sort of success, the borrowers must re-learn many of their most damaging behaviors. To be fair, there are many different reasons why people may find themselves overwhelmed by debt. Still and all, even those borrowers who have suffered catastrophic accidents (sudden unemployment, accidents, hospitalization or other medical emergencies, and other such unexpected disasters) could have attempted to make sure they had proper savings just in case such misfortune would befall them. This is not the most exciting form of debt management, to be sure, but it is of the utmost importance. Spending foolishly is by far the most common reason that most families start to drown in debts of their own making. Thoughtless purchases that you do not need (or, in many cases, even want) shall quickly lead to a reflexive pattern of overspending that will only result in credit card debts beyond your own control.

Unfortunately, once behaviors of any sort have become fixed toward conditioned habits of over spending, it is that much harder for consumer to even recognize their misdeeds. For this reason, it is a good idea for anyone beginning to investigate the various alternatives available to first do whatever they can to figure out how to cut their expenses to the bone before even approaching a debt management professional. One tip we would suggest would be to spend a month recording all household expenses. This does not mean simply adding up utility bills or calculating the grocery costs of any given month. Instead, actually write down all of the niggling little purchases that families tend to forget about. By this, we do mean every single cent that is spent by members of the household. The most seemingly chintzy or capricious buys often, once they are properly tabulated, end up proving vibrantly the underlying causation behind the larger debts.

Do you really need to spend one dollar for a soda at the office every day? Should you spend five dollars for a magazine at the store as opposed to a monthly subscription? Can you afford forty dollars for a family night out at the movies each week? At the end of the process, you will be surprised how much of your spending could be curtailed. Do you really need premium cable channels? Couldn’t you mow your own lawn yourself instead of paying neighborhood kids? Everyone must have some sort of entertainment budget, of course, but many households spend far too much on unnecessary foolishness. Even those borrowers who do not have excessive problems with credit card debts should always keep a close eye on household spending in order to maximize savings in case of emergencies.

What To Do When Your Debt Is Out Of Control

While curtailing purchases and controlling family spending habits are, as we have explained, quite important parts of debt management, there are some borrowers whose debt obligations have increased to the point that such stopgaps will not be of much use. Fortunately, there are now a number of alternatives to bankruptcy that debtors can take advantage of when trying to reduce their overall burdens. As you would imagine, the correct strategy would depend upon each debtor’s specific scenario. The first thing we would advise is to discuss options with your credit card companies. Believe it or not, your creditors will often work out payment schedules to make sure that they are not overly onerous. After all, the last thing they want is to put debtors’ backs against the wall so that they would consider Chapter 7 bankruptcy. Even if they will not significantly reduce the monthly minimum payments, they will generally waive past due fees and lower the cards’ interest rates. Whenever your accumulated debt has grown to the point that you have trouble making your minimum payments, it is always a good idea to talk to representatives of your various lenders to see what could be done. For those borrowers that have only come to such dire straits because of injuries, lack of employment, or other unforeseen events, obviously there should be even greater lenience expected from the credit card companies. More than even bankruptcy protection, the lenders’ corporate offices fear bad publicity for unduly punishing the forthright.

All the same, once debts have grown to a certain amount, even a drop in interest rates or an extended payment schedule may not be able to sufficiently aid borrowers. At this point, debt management professionals would likely urge such borrowers to consider investigating the debt settlement industry. In a way, this method is not terribly different than when borrowers contact credit card representatives individually to ask for special terms, but there are several aspects of this approach that deserve further explanation. With debt settlement negotiation, the debt specialists attempt to convince the credit card companies and whomever handles their sides of the negotiation to actively reduce their overall debt load – sometimes by almost fifty percent! Sounds incredible, but not all borrowers will be able to enter a debt settlement program, it should be said. Qualifications are extremely important within debt settlement because the settlement firm not only works on the debtors’ behalf when talking with the various lenders if they actually absorb the debts themselves.

It should now be more clear why the debt settlement alternative is considerably harder to take advantage of. Obviously, the settlement firms will only wish to take on the consolidated loans and credit accounts of those borrowers that they believe will repay their trust. Furthermore, not all credit cards will agree to the demands of settlement negotiators – though more and more are recognizing the benefits of the program every day. However, for those borrowers that successfully work with a debt settlement company, they can see their debt balances drop by tens of thousands of dollars within weeks. The reason that settlement specialists have so much more success in this form of debt management is not purely because of experience, training, (there is a national certification board) and prior relationships with lenders. No, this is why it is so important that the debt settlement company consolidate all of their client’s debts before they ever start negotiations. Settlement reductions only work when the creditors truly believe that all debts are being treated equally. It’s not just that the credit card companies would be less likely to listen to amateurs attempt to carve down their obligations. They will only agree to cut debts if they know that their competitors are doing the same.

Of course, as with any professional debt management program, there are disadvantages to be felt as well, particularly in the pocketbook. While the costs are negligible (and, generally, do not exist for first consultations) compared to the amount of money saved from successful debt negotiations, the settlement specialists do not work for free, and you will find yourself with additional charges tacked onto whatever balance they manage to barter down. Also, credit reports will take a hit after debt settlement. Credit accounts labeled ‘satisfied’ rather than ‘paid’ look somewhat worse to debt analysts, and FICO scores will suffer a drop – though, once again, when set next to the carnage wrought from bankruptcy debt elimination, most borrowers wouldn’t be able to tell the difference. As it may be harder for those borrowers who have gone through debt settlement to find credit cards just after the process has been completed, they will also have to close all open accounts so as to reassure the creditors that they are not planning some sort of scam. This can make it trickier for households to survive during the three to five years that debt settlement traditionally takes, but, as will all of the debt management tactics, the alternative is incalculably worse.

Modern Debt Management Systems Can Produce Tremendous Savings

Consumer and personal debt is, perhaps, the number one problem facing most American families today. The reasons behind the tremendous surge in debt have been related to emerging socio-economic patterns suggesting that we’ve become a nation obsessed with lifestyles and consumerism.

America has always been a nation of consumers and the American people have always enjoyed one of the highest standards of living in the world. Something else has contributed to this national crisis.

What has changed in the last several decades is that we have developed very sophisticated technology to acquire debt. Debt acquisition is as close as your cell phone or personal computer and can be accomplished in a matter of seconds.

However, we have been slow in developing such sophisticated systems to manage that debt at the consumer level. We have been the victims of a technological gap between debt acquisition and debt reduction.

If you do not manage your debt, it will manage you. Or more precisely, your creditors will manage your debt for you and they will, of course, manage it in a way that is most favorable to them, not necessarily you.

At the consumer level, we tend to keep our debts separated, divided, and isolated in separate accounts, making it impractical, until recently, to strategically manage that debt.

Automated debt management systems have been in use by banks, insurance companies, and other institutions as needed to maintain cash reserve requirements but, until recently, have not been available at the consumer level due to the cost of developing and supporting these specialized cash flow management systems.

Many people in other parts of the world have had access to various debt reduction systems. In this country, however, it is a relatively new opportunity to systematically manage our personal and consumer debt. We now have access to affordable technology to manage our debt rather than allowing it to manage us.

First, let me explain what a modern debt management system is not.

It is not a set of instructions or a “How To…” book available from a variety of well intentioned sources which simply overstate the obvious; instructing us to “stop spending so much money”, or “cut up our credit cards”. It is not a “makeover” system which painfully rearranges our daily spending patterns.

It is not a static spreadsheet or plan for debt reduction which does not consider our day to day personal financial circumstances.

It does not involve the refinancing of existing debt or consolidating smaller short term debts into larger long term debts. It is not a self administered or pre-calculated repayment acceleration plan. It does not involve negotiating with your creditors or any means of debt reduction which avoids the repayment of legitimate debt on a dollar-for-dollar basis.

Just like the bank model, modern debt management systems are integrated with your daily and monthly financial transactions. They are dynamic. Modern debt management systems have the ability to analyze and manage all of your debt, including your mortgage debt, side by side in a single environment and make strategic adjustments based on your daily or monthly cash flow.

A modern debt management system is programmed for liquidity. Liquidity is to debt what water is to fire. If you have an abundance of liquidity, you could be out of debt in very short order. On the other hand, if you have a shortage of liquidity, it could take decades to get out of debt.

A modern debt management system focuses on ways to harness current liquidity and seeks to fully develop your potential future liquidity. It utilizes that liquidity to systematically eliminate debt. It can develop multiple sources of liquidity and utilize that liquidity as leverage against debt.

Because of the importance of liquidity, modern and effective debt management and debt reduction systems are fully integrated with your current monthly income and expense cash flows. That is not to say that increasing your income and/or reducing your expenses is a requisite. A good debt management system takes advantage of existing cash flow, not necessarily changing it.

A modern debt management system is relatively painless to follow and does not require significant changes to your established spending patterns. It can be set to aggressively pay down debt, to maintain a certain level of debt but reduce the carrying cost, or fund a retirement or college savings plan.

Today’s sophisticated, versatile, and effective debt management systems are not inexpensive. However, in terms of future interest savings, they can make up the cost of the system in the first few months of use and, over time, produce interest savings in excess of the total amount of current and future debt.

An inexpensive or do-it-yourself system is probably not a good alternative. While you might be able to redirect some liquidity and do some good, you would not be able to recreate the integrated mathematical algorithms which drive a more sophisticated system producing the best possible results.

Any current financial plan worth its’ weight in paper should address both sides of the balance sheet and include a modern debt management system.

Let a Debt Management Program get your Debts on the Track

We, the people are habitual of getting our expenses exceeding our financial recourses. We want something and we get it even if our pocket doesn’t allow it. When shortfall of money is the problem, we take loans or debts for achieving what we want. This doesn’t affect us till we are able to manage them. But when these debts get out of our control and instead start controlling us, we are in trouble. In such situation a debt management program can be the cure to this financial fever.

Debt management programs are meant for debt removal and managing repayments, enable the borrowers to breathe easy in a debt less environment. These days debt management program providers not only prepares debt management plans but also other services which you can avail to control your debts in future. Credit counseling, bankruptcy and debt handling education, budget plans, online counseling, credit report and status analysis, measures to stop debt from arising further etc are the benefits which you can avail under a debt management program.

These debt management program providers also arranges debt consolidation loan for consolidation of your debts. With a debt consolidation loan amount you can consolidate all your existing debts. So that now you have to make a single monthly repayment installment instead of paying each debt separately. Also this saves lot of your money as the interest rate is much low as compared to what you are paying on all your debt in total. Debt management program combined a with debt consolidation loans serves you faster and better in eliminating all your debts.

A debt management program also provides you with the automatic deposit services. Under this service the debt management program providers automatically deducts the debt amount from your checking account and pay your creditors accordingly. This removes the hassle of repaying debts on your own. Also, these service providers have tie ups with large number of lenders. They can make your repayments affordable by talking to your lenders for interest rates and repayment term.

As we know that precautions always start at home, we can take certain steps from our side along with a debt management program to manage our debts. We can make lesser use of credit cards, which is a big reason for rising debts. Make cash purchase wherever possible or use debit card. Planning and budgeting can be of a great help.

Debt management program are uniquely designed for every individual. For applying for a debt management program you can fill an online application form with following details:

oPersonal details – Name, address and contact information, mobile numbers, email ID’s.

oDebt information – Amount of debts with you, number of debts with you along with details about your creditors, credit statement for reference.

oEmployment details – Your employment status and monthly income.

Enrollment process for a debt management program provider will take 30 to 40 minutes. The debt management program provider will contact you with the best possible solution after accessing your information and help you see a better world.

Debt Management Brings a Significant Change in Debt Scenario

Have you ever thought what would be the consequence of uncontrolled expenditure? While the desire to purchase continues to be unsatisfied, the income base gives up much earlier. The result is debts. Debts up to a certain level are admissible. Debts need to be managed to keep them within this level. The process involving the use of several techniques to curb the amount of debts is known as debt management.

Outside agencies may not always be the ones who carry out debt management. In fact, the first step towards debt management, i.e. accepting that debts are a menace, is taken by the borrower himself. This is an important step because no amount of debt management tips will be little helpful if the borrower does not have enough motivation to bring about a change in his financial situation.

Debt management help, for debts on a smaller scale require more participation of the individual himself. For debts that are not large and where the step is more of a preventive nature, debt management will include suggesting tips. One or two face-to-face sessions is what will be required. Along with the suggestions, debt management agencies will also tell about the problems that the individuals will face while incorporating the debt management tips. The individual himself has to employ the debt management tips. All the debt management agency would do is provide a helping hand whenever the individual falters.

Debt management on a smaller scale is known as debt counselling. The tips that are offered to curb the debts form a part of the ancient wisdom that is handed from generation to generation. The idea is to remind individuals of the knowledge. The following constitute the major debt management techniques adopted at this stage:
There must be a restricted expenditure proportionately to the income.

If possible, individuals must try to augment their income to suffice the additional expenses.

If a debt is incurred, it must be repaid or proper preparations must be made for its repayment

These and several other debt management tips will be offered to help bring about a real change in debt scenario. This will require patience and perseverance on the part of the borrower. Debt counselling can be a long drawn process. However, instead of creating cosmetic changes or a temporary healing of the debts as in debt consolidation loans and mortgages, debt counselling has a long-term effect on the individual’s debt scenario.

Nevertheless, the importance of debt consolidation loans and mortgages as a debt management tool cannot be discounted. When standing on the edge of bankruptcy, it will be imperative to clear the huge mound of debts already incurred. Once the finances regain health, only then should debt counselling be practiced. Situations like the one discussed above require an instant solution to debts and not a protracted one. Debt consolidation loans ensure the fastest release from the debts.

Debt consolidation loan is a personal loan that is employed to settle the debts. For the purpose of ease in settlement, all debts taken from several lenders are consolidated. The total of the debts is the correct measure of the amount of debt consolidation loan that must be drawn. The entire debt consolidation loan may not be consumed by the debts. It depends on the way debt settlement is negotiated. This is the reason why it is very necessary to engage the services of a proper debt consolidation agency. One of the principal distinguishing features of debt consolidation loans is that the loan provider helps in the settlement of debts. There is an active participation of the loan provider. In this method of debt management, the role of borrower ends once he presents the list of debts to be settled.

Debt consolidation mortgages, another popular debt management tool, is a second mortgage that includes certain debts in an existing mortgage. As in a debt consolidation loan, the borrowers will not be helped in settlement of debts. However, the advantage of this method is that debts are settled at the rate of a mortgage. Home equity loans also offer this advantage to the borrowers even though help from the loan provider may be absent.

Whatever be the method of debt management adopted, it must be effective towards debts. The ultimate aim of debt management must be to find a long lasting solution for debts. This can be brought about only by increasing awareness for the bad effects of debts and taking the necessary steps to curb them.