Debt management, or credit counseling, has become a huge industry these days as more and more people find themselves drowning in credit card debt. It seems that the farther you get sucked into the debt the more often you begin seeing all the ads promising easy debt relief. Are they legit? Are these debt management programs going to help you or just wind up hurting you even more? Here are a few important things you need to know about debt management – the good and the bad.
1 Don’t Let Non-Profit Status Fool You
A fact that several debt management companies are eager to broadcast is that they are organized as non-profit businesses. They know that this tends to make them look safer and appear more on the side of the consumer. The fact of the matter is that these companies, just like all others, are in business in order to make money. The only real difference between them and other for-profit companies may just be the way they allocate their earnings. Don’t let the non-profit status fool you into thinking that this company runs off the goodness of its heart; debt management companies do charge a monthly fee for their services.
2 It could be a DIY
The main role that debt management companies play is mediator. They speak with you and then reach out and contact your creditors on your behalf. They do the negotiating in order to get alternative repayment plans and ideally reduced interest rates and fees. If funds are already tight you may choose to do these steps yourself. Even though reaching out to creditors is never pleasant, they will typically be eager to help you meet your debt obligations. Creditors know that you aren’t the only one effected if you have to file for bankruptcy, so they usually want to help you avoid that as well.
3 Your Credit Score May Fall
This may or may not apply to you personally. If you are already battling with several late payments or are currently way behind on any credit card payments, then odds are that debt management will actually improve your score. However, if you are current on all of your payments, regardless of how much debt you actually have, your credit score may drop if you enroll into a debt management program. Regardless of what immediate effect enrolling into a program has on your credit score, the result of paying off your debts is going to be what’s best for your credit score in the long run.
If you believe that enrolling in a credit counseling program could help you, I encourage you to do your research thoroughly and get all of the facts before you sign up for any program. For some people a debt management program may be exactly what they need, but for others they can do much more harm than good. Don’t make any hasty decisions with such an important thing on the line.
If you find yourself struggling with debt or would like to find out about becoming debt free, call Debthelper at 800-920-2262, or visit @ www.debthelper.com.
