Is a Debt Management Program the Right Choice for You?
See how debt management programs help people get out of debt faster with payments that are 30-50% less.
[Narrator] Debt management doesn’t have to be so confusing. Here’s a quick and easy 60-second snapshot of how debt management works.
[On-screen text] Debt management
[Narrator] In normal circumstances, you manage all of your debt on your own, paying off as much as possible each month to avoid issues.
[On-screen text] Credit card = $15,264.00
[Narrator] But when credit card debt gets out of control, the bills outstrip what you can afford to pay.
[On-screen text] Debt management program
[Narrator] A debt management program helps you rein in runaway debt by combining all of your unsecured debt into one payment
[On-screen text] All debts, one payment
[Narrator] You only have to worry about one bill each month, so you’re not juggling multiple payments.
[On-screen text] Jan = $376.00
[Narrator] Plus, with interest that’s reduced or eliminated completely, you can get out of your debt faster even though you pay less each month
[On-screen text] 24%… 15%… 10%… 6%. Get out of debt faster!
[Narrator] Instead of the decades it takes to pay off debt on a minimum payment schedule, most people are debt free in 60 payments or less.
[On-screen text] Debt Free: Sixty months or less
So, if you’re feeling overwhelmed and see rainy days ahead, we can help.
[On-screen text] ConsolidatedCredit.org, 1-800-320-9929
[Narrator] Call Consolidated Credit today for a free debt evaluation with a certified credit counselor. Together, we can create a customized debt management program so you can finally get your debt under control.
High interest rate credit card debt has a way of trapping people in a cycle of payments. You make payments diligently, but never seem to get any closer to zero. You need to find a better way to get out of debt. A debt management program could be the best choice to pay off your debt, while saving money. Here’s what you need to know.
What is a debt management program?
A debt management program (DMP) is a repayment plan designed to help you eliminate high interest rate credit card debt. You enroll voluntarily through a credit counseling agency that helps you find a monthly payment that works for your budget. It’s not a loan – just a better, more efficient way to pay off your credit cards.
How debt management programs work
- First, a certified credit counselor reviews your budget, debt and credit. They’re checking for two things:
- Are you eligible for the program?
- Do you have any other options for relief?
- If a DMP is the best choice, the counselor helps you work out a repayment plan that fits your budget.
- Then they contact each of your creditors. Your creditors agree to adjusted repayment plan and to reduce or eliminate interest charges on your accounts.
- You make one payment to the agency and they distribute the funds to your creditors on your behalf.
- During enrollment, there’s a freeze on your accounts. Your counselor helps you work out a budget that allows you to live credit-free. Once you pay off your debt in-full, you can restore your accounts wit hour creditors.
If you run into trouble making a payment, you can call the agency and they can help you work out a solution. You can leave the program at any time; your accounts are credited for all payments made.
Get results faster than you think, for less each month
The reason debt management programs work centers on interest rate negotiation. Nonprofit credit counseling agencies have established connections with creditors based proven records of helping clients pay off debt. That means they can negotiate lower rates even if you’ve tried on your own without success.
If you minimize interest charges, you can get out of debt faster, even though you may pay less each month. Here are a few case studies from real clients of Consolidated Credit:
Denise from Valencia, CA
I consolidated my credit cards so fast and efficiently with this program. Consolidated Credit made it all so easy!
Where she started:
- Total unsecured debt: $17,196.00
- Estimated interest charges: $9,052.90
- Time to payoff: 10 years, 4 months
- Total monthly payments: $687.84
After DMP enrollment:
- Average negotiated interest rate: 8.56%
- Total interest charges: $2,557.55
- Time to payoff: 3 years, 8 months
- Total monthly payment: $451.00
Wanda from North Farmerville, LA
It’s a great service that consolidated my bills into one monthly payment and lowered my interest rates. Try it! This program is for anyone that is serious about getting out of debt. They are serious about helping you. I’m so glad I called.
Where she started:
- Total unsecured debt: $12,892.00
- Estimated interest charges: $7,102.91
- Time to payoff: 10 years, 4 months
- Total monthly payments: $515.68
After DMP enrollment:
- Average negotiated interest rate: 8.30%
- Total interest charges: $1,920.15
- Time to payoff: 2 years, 7 months
- Total monthly payment: $476.00
Weigh the benefits of a DMP
Here are some hard numbers about what we do for our client:
- Clients typically see their interest rates reduced to between 0 and 11 percent.
- Statistics show DMPs reduce total monthly credit card payments by 30 to 50 percent.
- Most clients complete the program within 36 to 60 payments.
How a DMP can actually improve your credit
People’s biggest concern with enrolling in a program like this is usually how it will affect their credit. Since a debt management program repays everything you owe, it doesn’t damage your credit. In fact, you build a positive credit history and improve your utilization ratio; those are the two most important factors used to calculate your credit score.
#1: Debt management is not the same as debt settlement
This program is not the “pennies on the dollar program that the credit card companies don’t want you to know.” We’ve all heard those advertisements. And it’s not that your creditors don’t want you to know, they don’t want to use it. What’s more, you shouldn’t want it either.
Debt settlement is where you settle your debt for less than you owe. It lasts causes credit damage that lasts as long as a penalty for bankruptcy. Debt management simply repays everything that you owe in a more efficient way. Both eliminate your, but they do so in very different ways.
#2: DMPs are largely the same, no matter where you go
Credit counseling agencies are nonprofit, so plans differ very little as long as you work with a legitimate organization. Fees cover program setup and administration; they’re also controlled by state law and typically capped at $69.
The only differences between programs are the extra resources and support the credit counseling organization provides.
- Understand how programs can differ »
- Learn how to spot a debt relief scam from a legitimate agency »
#3: A DMP is just part of the credit counseling process
Getting out of debt is great, but if you don’t learn better habits you can slide back into debt quickly. A debt management program helps you achieve freedom from debt, but credit counseling teaches you to how to maintain stability. When you dive into the process, you learn to avoid traps that lead to debt.
[On-screen text] Do you use credit cards to “get by” when you don’t have enough cash?Narrator: People often use credit cards to make ends meet when they have a limited cash flow.
[On-screen text] But that can lead to problems with DEBT
Narrator: High interest rates on credit cards can double the cost of items if you’re only paying the minimum amount due each month.
[On-screen text] Renee amassed over $19,000 in credit card debt
Narrator: For Renee, getting by on credit cards during graduate school put her on a treadmill of debt.
[On-screen text] Her credit card interest rates were between 15-20%
Narrator: She was shelling out over $1,200 a month to her creditors, but getting nowhere fast
[On-screen quote from Renee] “I talked to a few companies first. Consolidated Credit stood out because I was still in control of my finances.”
Narrator: Luckily, Renee found Consolidated Credit and enrolled in a debt management program.
[On-screen text] Debt Management Program: Before $1,200 per month; After $500 per month!
Narrator: The program reduced her total monthly payments by almost 60 percent.
[On-screen quote from Renee] “The experience of living without credit cards really changed my mindset. It changed how I budget and spend my money now.”
Narrator: The monthly savings meant she didn’t need credit cards to get by anymore, because her budget was balanced.
[On-screen text] After her interest rates were reduced to 1%, Renee was debt free in 4 years!
Narrator: And she could use part of that monthly savings to save up for a new house. Renee had this to say in closing:
[On-screen quote from Renee] It was a great feeling that I was no longer using credit to get by.
If you feel like you’re barely keeping your head above water, pay your credit cards off. And there’s nothing wrong with asking for help!