Ask the Expert: Who Do I Owe on a Debt Management Program?
In this Ask the Expert, President Gary Herman explains how you still owe your debts to the original creditors even after you enroll in a debt management program to help you understand how the program works.
People ask that question all the time. They want to know, “Does your program pay off my bills and then I owe you the money?” And it’s a very common misconception, and I think part of it’s because people in our industry use the term “debt consolidation,” which is really only meant to suggest that you’re making one payment. How it works is actually the opposite. The consumer always owes the money to the original creditor that’s put on the program. The only thing a debt management program does is qualify the consumers for programs that their creditors make available for people who come through these programs to give them better interest rates, in most cases better payments. And they do it, in part, because the risk of you not being able to pay off bills is greatly reduced when you use a program like ours. The only question left to be seen for each individual consumer is, “Do you qualify for the program?” and that’s what we specialize in doing, in addition to helping you figure out what your other options are. But you still owe the money to the original creditors. Our program is completely voluntary – you can drop out at any time you want. All of the payments you’ve made still get credited to the original creditor, but now you just need to go back to paying them and your interest rates can and probably will go back up to where they were before.
If you’re struggling to get out of debt, we can help. Talk to a certified credit counselor to find a better way to repay what you owe, without taking on more financing.