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What Is Debt Management Credit Counseling?


Learn About How Debt Management "Credit Counseling" Can Pay Down Your Debt Without Harming your Credit Score

Debt management, by the standard definition, involves a designated third party assisting a debtor with repayment of his or her debt. Companies specializing in credit counseling offer debt management plans to help people with heavy debt and damaged credit get their financial situation under control. In essence, debt management is a structured repayment plan set up where your interest rates are typically single digit rates, either as a result of a court order or as a result of personal initiation.

A debt management plan entails a series of steps, in which the third party service provides pre-negotiated interest rates that are typically very low in exchange for a repayment plan of the debt in full.The first step then would be to gather a list of all creditors and the amounts owed to each. Some creditors are not eligible to be included in a debt management plan, such as secured debts such as car loans or home loans are not included since defaulting on that payment results in a foreclosure or repossession in which case the sale of that asset is given back to the creditor.

Once a list of creditors is compiled and the amount of debt is totaled, the debtor’s total income and expenditures, such as mortgage or rent payments, car payments, cost of living expenses, and so forth on are totaled as well. The third party agency assisting with the debt management plan then helps the debtor to determine the maximum amount of money available to allocate to the plan for debt repayment.

There are two primary options you can choose in a debt management plan. As stated earlier, the first dmp plan results in a debtor repaying back the full amount, but at lower interest rates, generally for credit cards or personal loans. The second debt management plan is a settlement ranging from 15% to 70% of the original debt amount. Typically collection accounts and medical bills can also be included in these programs as well since they are considered unsecured debts.Settling for less than your balance is referred to as debt settlement

Do I Qualify For Either Debt Management Plan?

Generally a debtor must have more than 5,000 US dollars (USD) of debt to qualify for either program, but in some cases you can have as low as $3,000 for a dmp plan. Since United States bankruptcy laws changed in October 2005, it has become necessary to undergo credit counseling in a long-term debt management plan because personal bankruptcy is not an option. When privately seeking the assistance of a third party debt management service, make sure that they are an actual company which is easily found on any secretary of state website. Being registered with the Better Business Bureau is also helpful to view any complaints they have and why. An enrollment fee is to be expected for debt management services, and there may be monthly fees included in a debt management plan since customer service is such a huge department for these companies to be successful.

What occurs in a debt settlement is first a quote of your total unsecured debt. Your state, total debt, and number of months available for a debt settlement payment plan is then calculated. Once an affordable monthly payment can be determined, a calculation of your total debt savings is determined. You would then be set up on a monthly payment plan where your funds are electronically drafted from your checking or savings account into a FDIC non-interest bearing savings account. The benefit of debt settlement is that when you do not have a lump sum saved up, you have zero negotiating power with your creditors. Creditors always want a lump sum, or three large payments that most people in financial distress cannot afford. In addition to setting you up on a payment plan, you are educated on the appropriate ways to deal with creditors, what not to say, and how to demonstrate you are in financial hardship.

Debt Settlement does have a negative impact upon your credit score from stopping regular payments to your creditors, but the people we recommend for debt settlement are already behind on their payments, and thus have already harmed their credit score.

How Is My Credit Score Calculated ?

35% of your credit score is based upon your payment history of making payments on time, that is how it is damaged. In addition, 30% of your credit score is based upon your debt to income. When your debt is very high, especially across several credit accounts, it is not wonder that you are considered a higher risk and that reduces your credit score. So having more than $10,000 in credit card debt and having late payments has already harmed your credit score. If this is your financial scenario, debt settlement is the key to reducing your debt in 4 years or less, thus eliminating that 30% hit to your score, and repairing your credit becomes possibly again through timely payments on accounts you can afford to pay.

For a no cost, no obligation quote on your financial situation, contact us now.

 


 

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Debt Management Guys




It doesn't matter how you got into debt. We can help you eliminate your debt in a time frame that works for you. Our Debt Management Program can help you do exactly that. For a no cost, no obligation quote on your financial situation, contact us now. or Call Or Text 404-666-8432 To Schedule A Phone Consultation Today.


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*Estimates based on prior results; individual results will vary based on circumstances, including your ability to save sufficient funds and complete the program. We do not guarantee that your debts will be lowered by a specific amount or percentage or that you will be debt-free within a specific period of time. We do not assume consumer debt, make monthly payments to creditors or provide tax, bankruptcy, accounting or legal advice or credit repair services. Not available in all states. Please contact a tax professional to discuss tax consequences of settlement. Read and understand all program materials prior to enrollment, including potential adverse impact on your credit rating.**While the testimonials and other information on this website may be exciting, Debt Management Affiliates, Debt Management Guys, Debt Settlement Guys, and (or) Debt Consolidation Guys promises only to perform the steps we've agreed to in each client's case. As with any legal work, no outcome is promised. Your results may vary.***Facts and Figures on our website are substantiated by our back-end operations. Our back-end operations are accredited by the USOBA and TASC. Debt Management Affiliates, Debt Management Guys, Debt Settlement Guys, and (or) Debt Consolidation Guys are not affiliated with MSNBC, Fox, CBS, or USA Today and logos used are registered trademarks of their respective owners.