Will Debt Management Help You?
High interest credit cards and other unsecured debts – department store cards, gas cards, medical bills, doctor bills, personal signature loans, and other debts - often cause Massachusetts residents, and many people across the country, to struggle financially. If you find yourself in this situation, you may be researching information regarding debt management programs, or debt management plans (DMPs) coordinated by credit counselors or debt counselors. In addition, you may also be considering alternative debt relief options such as debt settlement, debt negotiation, or even bankruptcy. It's important to compare and contrast the differences between these debt relief options and understand the role they play to help provide relief for consumers experiencing financial hardship.
Credit Counselors Customize Debt Management Plans
Consumers who want to combine or consolidate their high interest credit cards and other unsecured debts into one, affordable monthly payment may want to examine a debt management or credit counseling program. A debt management plan coordinated by a credit counselor or debt counselor is designed to help consumers save a substantial amount of money and get out of debt at a more predictable and more manageable pace, by taking advantage of the benefits of debt relief, such as lower interest rates and the waiving of late fees and penalties.
If you are going through a financial hardship and need to explore your debt relief options, you can get your free debt relief evaluation and savings estimate at no obligation.
Debt management plans (DMPs) are specific to each individual or family. Generally, credit or debt counselors will interview individuals experiencing financial hardship and verify how much debt the consumer is facing. They will then gain a good understanding of the consumer's income level and how much money the consumer can realistically set aside each month to pay down or pay off debts. Lastly, they will design a customized debt management plan that calls for the individual to refrain from using credit cards and make one consolidated payment each month to the credit-counseling agency, which will then distribute the funds to creditors one by one. Before this plan can be put in place, however, it must be submitted to creditors requesting that they agree to extend the benefits of debt relief to the consumer in need. These benefits can include:
- Lowering Monthly Payments
- Reducing Interest Rates
- Waiving of Late Fees and Penalties
- Consolidating or combining debts into a single, more manageable, monthly payment
- Helping you save substantial money and allowing you to get out of debt in less time than you could on your own if you were to continue paying only the monthly minimum month after month at higher interest rates.
If creditors agree to the submitted proposals of credit or debt counselors, they are then added to the debt management plan. Consumers still must pay any creditors who do not agree to extend the benefits of debt relief according to the original terms of their cardholder agreements.
Looking for relief from credit cards or other unsecured debts? Answer a few simple questions and your free debt relief evaluation and savings estimate at no obligation.
Certified credit counselors or debt counselors working with credit counseling agencies can also provide a variety of additional debt relief services. Such services include help with budgeting, education regarding how to develop good spending habits, and more. Again, truly exceptional credit counseling agencies will always have a strong educational component to their program. They will do more than help the individual or family get out of debt; they will also help the consumer understand the root cause of their debt crisis and give them the tools and knowledge to put an end to the cycle of debt once and for all.
Could Debt Relief Help You? Get your free debt relief analysis and saving estimate.
Debt Management Saves Money Through Commitment
Many residents of Massachusetts have turned to credit counseling for help in resolving their debts. While it is a tried and true method of debt relief, debt management also requires basic financial discipline and restraint to avoid using credit cards. Consumers must also make their consolidated monthly payments on time and make an overall commitment to remain on the plan's course. It normally takes three or more years to complete the program and realize the full benefits of debt relief but the savings in money and stress can be life changing for people who are used to being mired in debt. Three years or more may seem like an extended period of time, but faced with the prospect of a lifetime of debt, just a few years of discipline to get on track financially can save many years of stress and heartache.
While debt relief does not make debts magically go away, it has provided welcome relief and helped countless individuals and families escape the burden of perpetual debt and get on the path to a life of financial freedom!
Help from the State
During times of financial hardship, debt relief programs may provide much-needed relief for many individuals and families. Some consumers, however, may be in need of more immediate relief to care for the necessities of life, such as help paying for utilities, rent, food, childcare, gas, or even doctor visits or medical bills. The state of Massachusetts has a variety of financial assistance programs available for residents, such as The Low Income Home Energy Assistance Program (LIHEAP) or the Massachusetts Transitional Aid Program.
To learn more about these resources to help individuals in hardship care for basic needs, go to the state's homepage Benefits section.
Alternative Debt Relief Options Are Available
Debt settlement or debt negotiation is a debt relief option that is more commonly utilized by individuals and families who have high interest, high-balance credit card debt and are seriously considering bankruptcy. It is a more aggressive form of debt relief that has helped consumers get out of credit card debt faster - if the consumer can accumulate money in a single account (lump sum), which can later be used to extend a settlement offer to creditors. There are important differences between debt settlement and debt management that must be understood. With debt management, you are basically paying off everything you owe, but through the benefits of lower interest rates and a waiving of late fees and penalties you can still save a substantial amount of money AND get out of debt at an accelerated rate. The goal of debt settlement is quite different in that settlement's objective is to "settle" with credit card companies for much less than you currently owe.
Why would credit card companies be willing to "settle" with cardholders for less than the full amount? If credit card companies eventually decide to "sell off" accounts that are 60, 90 or more days late to a collection agency, creditors may get as little as 10 cents on the dollar. Under those circumstances, it is not surprising that credit card companies may be willing to accept a reasonable settlement offer made by you or by a debt settlement company negotiating on your behalf. It is important to recognize that money saved through credit card settlement, which can be a large sum, is subject to federal taxation. In addition, when consumers default on their credit card agreements in order to set aside money in a settlement fund, creditors may threaten or take legal action. Finally, debt settlement will likely have a negative impact on personal credit, but not be as serious or long lasting of an impact as personal bankruptcy.
To compare your debt relief options and see how much you could save, take a moment to answer a few basic questions so that we can connect you to a BBB-accredited (Better Business Bureau) debt relief provider who may assist you.
Before enrolling in any debt relief program, it is necessary to clearly understand how much debt relief can potentially save, how long it will take to realize those savings, and the impact that any debt relief program could have on personal credit and taxes.
To learn what debt relief could do for you and get an estimate of how much you could potentially save - take a moment to answer a few questions online. Get your free debt relief analysis and savings estimate online.