When To Opt For Debt Management Credit Counseling?

Debt management credit counseling is a useful tool to help you to get back on your feet if you find yourself choked with a lot credit card and other types of unsecured debt.  Debt management credit counseling services are most useful to people who have the means to pay off most of their debts but for one reason or another have found themselves behind in payments or just making the minimum payment and getting nowhere near being able to pay off their credit cards. This service is not for people who are unemployed or who have so little income that they can barely cover the necessities let alone make payments to creditors.


If you are among the first group, then debt management credit counseling can help you by first going over your finances to see where you stand and to help you plan a budget that you can live with. Second, the counseling agency will contact all of your creditors and negotiate with them to lower your interest rates and perhaps waive any late payment or over-the-limit penalties. By doing this, the counseling agency can make it possible for you to pay off all of your debts in a certain period of time, usually between four to six years.  You will then pay a single monthly payment to the counseling agency an the counseling agency will pass each creditor it’s share of that payment.  During the repayment term, you will be asked to live on the slim budget that you have discussed  and not take on any additional debt.

Because you are basically entrusting the debt counseling company with money assigned to pay your creditors, you should carefully choose one to work with.  Before entering into any agreements with any debt management credit counseling agencies, be sure to check them out. You can research the company through the Better Business Bureau and through online resources like Ripoffreport.com.

You might be wondering if using a debt management counseling service will affect your credit. The answer is that yes, it will,  and the hit is on par to what you would expect with a bankruptcy. The reason for this simply that you’ve had trouble managing your debt, for whatever reason. It might not seem fair, but that’s how the financial industry views things. 

In any event, the hit that you take on your credit from getting help from a debt management company is well worth it when you consider that in four to six years, you will be debt free in and in good position to start over.

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One Response to “When To Opt For Debt Management Credit Counseling?”

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