No one wants to be hurting due to debt. But this is unfortunately the reality for millions of consumers in the United States. There are, however, programs that can help individuals get to a better place with their debt. Debt management is one of these options. But is debt management right for you?
What Is Debt Management?
Debt management is a way consumers can get their finances under control by utilizing a plan created for them with the help of an external agency. More commonly known as a debt management plan (DMP), debt management is a program designed specifically to help you pay off your bills.
A credit counseling agency is typically the first place you want to look to find a debt management plan. Credit counselors typically work for non-profit organizations that have a goal of helping consumers get right with their debt. Even if a DMP doesn’t end up being the right option for you, speaking with a credit counselor can help you find the resources that will allow you to get out of debt sooner. Much of what they offer is completely free, including helpful budgeting and educational offerings.
But what exactly is a debt management plan? In essence, it’s a form of debt consolidation—just created and administered by a third-party organization such as a credit counseling firm. With a DMP, the outside organization will work with your lenders to set up a new repayment plan. This will typically extend the repayment over a longer period of time in order to make your monthly payments more affordable. By altering the terms of debt repayment, many consumers will find they finally have the leverage they need to stop falling behind on their bills.
Since debt management is designed to be a helpful service for consumers, it doesn’t come with many of the strict prerequisites of getting a loan. For instance, you can be eligible for a debt management plan even if you don’t have great credit. Enrolling in one can also end the harassing collection calls that tend to take over people’s lives when they’re late on bills.
There are clearly some great aspects to DMPs. At the same time, not everyone is going to benefit from debt management in the same way. For some individuals looking for help with credit card debt, other options might be more appropriate than debt management.
Is Debt Management Right for You?
Debt management can be a wonderful solution for many consumers. But it’s not a magic pill that will immediately solve everyone’s debt problems. Some individuals will find that they simply need a more intensive intervention than what’s offered by debt management in order to finally get out of debt.
Some people need so much help with paying their credit card bills that debt management simply won’t be enough to do the job. If you’re in this boat, it might be time to start thinking about debt relief as a possible avenue.
Debt relief is different than debt management because it doesn’t operate on the assumption that you’re going to eventually pay back your bills. In fact, it takes the opposite approach. With debt relief, you’re basically saying that it’s not possible for you to pay your creditors. So instead of prolonging the process, you take it head-on by working with a company that will negotiate on your behalf. When you settle your debt, you no longer have to worry about those bills— though it can leave a substantial dent in your credit score. Many who are already struggling to pay, however, will agree that getting out of debt is a more important first step, and repairing your credit can come afterward.
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It’s also important that you ensure you’re working with a legitimate debt relief company if you decide to take this route. There are people who attempt to take advantage of individuals who are struggling financially. Since debt relief can be a somewhat confusing process, it can be easy to end up being scammed, or even just used, by those who don’t really represent your best interests.
If you’re having a tough time getting out of debt, looking into debt management is worth your time. It can be a highly effective program for those who just need a little bit of help to get their head above water.
