Debt Angel - Debt Management

Debt Management - You Must Master Debt, Or It Will Become Your Master!

What is Debt Management?

Debt management is an all-encompassing term for many different programs designed to help people manage a debt level that has become too troublesome to handle. How troubled are you by your debt? Ready to get the requisite debt relief that is available for you today?

Debt management - The basics

Debt consolidators are folks who unify your various unsecured (no collateral) debts into one monthly debt payment for a specific term. The payments are easier to make with a consolidated debt because the payment provided by your debt management company is lower than the total payment with multiple debts, and now you have only one creditor to pay -- your debt manager. Debt management is particularly nice if you've been having bill collectors knocking at your door because debt consolidation companies can keep them away. They take a slice of the pie, but the idea is that they are still saving you money by their negotiations with your creditors.

Why should your creditors be interested in participating with you in debt management? By working with a debt management service, they may receive certain tax benefits; in return, they will offer reduced interest rates, sometimes as low as 0%. From their viewpoint, they should be willing to negotiate, because if you default, they get nothing, whereas you work through debt consolidators demonstrates that you are honestly trying to pay them back.

Generally, a debt consolidation management firm will assign you a personal representative. This professional debt counselor will work with you and your creditors as an intermediary. Their goal is to get your creditors to lower your interest rates, and maybe waive late fees and penalties. In some cases, they can negotiate to cut the actual principle owed by 10 to 50%.

Once the debt crisis is averted, you're going to need to get on a budget and begin closely monitoring your expenditures. Credit counselors can help with that as well.

Of course, there is a down side. Some creditors frown on seeing a record of debt management services; they will issue an alert on your credit report.

Debt Management Services: Choose Wisely

You need to be cautious when choosing a credit counselor. As with all businesses, there are some good ones, and some less than honorable ones. Services marketing themselves as "Christian debt management" services need just as much scrutiny as their secular counterparts!

You need to find out what services you will receive, in writing. You need to ask what professional groups the debt management company may belong to, such as the National Foundation for Credit Counseling (NFCC), the American Association of Debt Management Organizations (AADMO), or the Better Business Bureau. And these groups are a good source for locating reputable debt management firms in your area.

Certified counselors are committed to helping users find their way through the maze of financial challenges. They help to

Assess your financial situation
Set financial goals with for you
Develop a spending plan
Create an action plan

You need to be cautious that the debt consolidation company doesn't keep the first month's payment as a fee, instead of dispersing it to your creditors. This has been known to happen, and if it does, you may now be one (more) month behind to your creditors, thus hurting your credit rating further.

"Education is a key tool to prevent consumer injury." At the FTC (Federal Trade Commission) website, www.ftc.gov, there are publications with advice on avoiding scams and rip-offs, as well as tips on other consumer topics. Many people blindly into debt management programs that they know very little about, so knowing the facts and doing a little research will put you ahead of the game and it will make it much easier for you to spot a good debt management solution when you see one.

There is also a site called Myvesta.org, which posts a list of credit and debt counseling scams to beware of, as well as suggested questions to pose to organizations offering to help you out of debt. See, there are really so many quality ways to get out of credit card debt. Still, be sure to practice debt management religiously. Hey, that was a pun! Better go find a debt management program before we start rhyming or something.