Debt Management Services

What You Need to Know About a Debt Management Program

A debt management program is one of the debt consolidation options you have available when you have too much credit card debt. It can help reduce your monthly payments to ease the burden of your debts, but still allows you to pay your debts off in-full. In the right circumstances, a debt management program can help you get completely free of credit card debt in as few as 36 payments—just three years to eliminate your debt!

If you’re considering using a debt management program to find relief from your credit card debts, you most likely have questions about how the program works and what will happen. Give us a call at 1-800-320-9929 to speak with a certified credit counselor who can answer any questions or concerns you have. You can also take advantage of a free budget analysis to see if debt management is right for you. If you prefer, get started online today with your Free Debt Analysis and a counselor will contact you soon.

How a debt management program works

A debt management program is just one debt consolidation option you can use to find debt relief. Like other debt consolidation options, a debt management program combines multiple unsecured debts into a single monthly payment that is often much lower than what you’re paying now.

To get started, you have to contact a credit counseling agency and speak with a credit counselor. They will assess your debts, as well as your overall monthly budget. They look at what you currently owe, to whom, and the status of each account—i.e. whether you are past due and by how long. At the end of the consultation, the counselor will be able to tell you if you qualify for a debt management program.

If you do qualify, the credit counselor can usually even enroll you right there to start providing relief as soon as possible. From that point on, you pay the credit counseling agency one payment each month then they negotiate and pay your creditors on your behalf. You continue paying until all your unsecured debts are paid off and you’re completely debt-free.

What a Debt Management Program Can Do

A debt management program provides you debt relief because it reduces your monthly payments. Enrolling in a debt management program can also reduce the interest rate on your credit card debts as to low as 6%-10%, since the interest rate you get isn’t based on your credit score—it’s based on the solid relationships the credit counseling agency has established with creditors and other financial service providers. In some cases, the credit counseling agency may even be able to get some of the penalties and fees placed on your accounts waived.

Enrolling in a debt management program can also help your credit. After you’ve enrolled and started making payments, your creditors will usually bring your accounts current within 3 months of your first payment. You also stop any credit decline by making your payments on time. In fact, making all your payments to complete the debt management program may improve your credit score, since it builds a positive credit history and reduces your overall debt.

What a Debt Management Program Can’t Do

A debt management program can’t help you with any secured debts. You can’t consolidate your mortgage or car payment, nor can you consolidate any secured personal loans or student loans—although there are other programs that can consolidate student loans. What it will allow you to do is consolidate your unsecured debts, which will free up more money so you can make the payments on your mortgage and/or car.

What You Can Expect with a Debt Management Program

Once you enroll in a debt management program, you can tell any creditors or collection agencies that call regarding payments for those debts that you’ve enrolled in the program. This stops all those phone calls you try to avoid, so you can rest easier every time the phone rings.

If you were behind on your payments before qualifying for and enrolling in your debt management program, you can usually expect those accounts to start showing current after 3-5 consecutive payments have been made. Most people who enroll in a debt management program are usually completely debt-free in just 36 to 60 payments. This means you only take a few years to pay off your debt, instead of a few decades.

While you’re working through the program you can still apply for a mortgage, as well as a car loan. You don’t have to worry that enrolling in a debt management program is going to keep you stuck in the same place for the next few years. As you work progress through your debt management program, you’ll also get budgeting tips and personal finance advice from your credit counselor, so once you’re out of debt you’ll be better equipped to stay that way.