Learn everything you need to know about debt management programs all in one place. Debt management programs, or DMPs, give consumers an option for finding debt relief without damaging their credit score or putting their assets at risk. Use the step-by-step debt management guide to get essential information on how the programs work, the pros and cons, FAQs and more. Explore the individual debt management articles to get detailed information on specific topics.
- Complete Guide to Debt Management Companies & Programs
Use this comprehensive step-by step-guide to learn everything you need to know about debt management programs quickly and easily. Debt management programs, or DMPs, provide consumers with a debt relief option that’s doesn’t damage their credit and doesn’t put their assets at risk. The debt management guide outlines essential information on how DMPs work, important debt management pros and cons, how it affects your credit score and more.
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Pros and Cons of Debt Management Programs
If you are looking for a method of getting out of debt, then you have probably considered a debt management program. Before starting in any program for debt assistance, it is important to learn the facts about the pros and cons of the solution. Debt management is a very specific type of program to get out of debt, but it is not necessarily the best in every situation.
The advantages of a debt management program are the first part of determining if the service is right for personal debts. Debt management programs are not for everyone, so it is important to learn about the advantages before starting in the new plan.
A key element that is useful in the plan is the one monthly payment made to the program rather than multiple payments made to all of the creditors. This will help limit the risk of forgetting to make monthly payments to the creditors because the program handles the payments for consumers.
In some situations, the over-limit fees or other added charges are waived after entering the program. This is sometimes helpful, but it is most useful when large added costs were put into the account.
The program will help end the collection calls, which are sometimes harassing in nature or simply annoying due to the constant reminders. This usually takes a few months before all calls are eliminated because it takes time to bring all of the debts to current.
In most cases, debt management programs strive to gradually improve the credit score. Reduced scores are uncommon because consistent and on-time payments are made over the course of the program.
The debt management program will usually also provide educational tools and counseling to help consumers avoid getting into the same situation. This is useful when trying to find a way to eliminate debt and avoid going into debt in the future.
The disadvantages of debt management programs are very specific and make it clear that the program is not for everyone. In fact, many consumers drop out of the program due to the downside of working through this method.
The first consideration when looking at disadvantages is the strictness of the program. Debt management is very strict and does not leave any wiggle room. You will find that all revolving accounts are frozen, and by the end of the program, all of the credit cards and debts are closed. This is not always the goal for every consumer.
Beyond the strict guidelines, consumers must live without debts for the duration of the program. This means it is not possible to obtain a mortgage, car loan or any other form of debt for four to seven years while working on the debts. In many cases, this rule is difficult to work around, particularly when a raise at work has made it possible to take out that mortgage or car loan.
The risks associated with the plan are another potential problem. Consumers need to use caution when seeking out a program because fraud is widespread and some companies will make late payments that leave consumers in a negative situation rather than helping get out of the situation.
The Settlement Alternative:
Consumers who are looking into debt management plans should consider getting a consolidation or settlement through negotiation with the creditors. This type of solution is much faster than the debt management program, and it has the benefit of eliminating the debts much faster so that it is possible to move on.
Settlement offers the creditor a lump sum of cash in exchange for forgiving the remaining debt. While it will have a short term impact on credit scores, it is possible to start improving the history immediately after the accounts are settled and the debts are reduced.
On average, a settlement program will take between 24 and 48 months to clear all of the unsecured loans and debts added to the program. That helps cut the amount of time dramatically for an improved situation much faster than the original situation.
Settlement negotiation has many of the advantages associated with the debt management program, but offers more flexibility and a faster debt elimination time that give it the advantage for most individuals. Debt management is hard to continue due to the rigid structure and the inability to change the program based on differences to the situation.
If you are looking for a way to manage your debts, then the best solution is looking into consolidation and settlement through negotiation services. Debt management programs are hard to maintain, freeze all credit accounts and are very strict in the services provided. To learn more about settlement options or consolidating with negotiation, call us today or fill out the form for a free debt analysis. You do not need to struggle with complicated debt management programs.