If you end up building up credit card balances and get stuck in the ugly cycle of paying only the minimum balances each month, you could end up spending multiple years paying off your debts. With the high interest rates credit card companies charge, you could end up paying twice for items you may forget you ever bought. A debt management program can help you get out of this cycle.
When you get into debt, you can do one of four things:
One easy way to find a debt management program is on the internet. Many debt management programs offer their services through a free initial consultation on a secure Web site. You simply gather your bills together and input your information. A representative from the debt management program will contact you quickly, sometimes within 24 hours.
Remember, most debt management programs consolidate only unsecured debt. This is bills like credit cards, department store cards, medical bills and loans without collateral. Your home loans or car loans are secured, which means they have collateral or equity, and a debt management program does not work with these loans.
When you enroll in a debt management program, you will be able to pay back your debts and stop the phone calls from collectors. The negotiators from the debt management programs work with your creditors throughout the term of the program until your debts are paid, so your stress of dealing with collectors is gone.
You will probably pay a fee to the debt management company each month for their services. Research the companies and ask questions to find out how much that fee is and also how much of the cost is absorbed by the creditors themselves. Many creditors absorb much of this cost because they would like to get their money back. They realize when they pay part of the fee for a debt management program, they will at least get the principle you borrowed, rather than get nothing if you file for bankruptcy.
Be sure whichever debt management program in which you decide to enroll is licensed, insured or bonded — or all of these. This way your money will be protected until between the time you pay the debt management program and the time they pay your creditors.
Above all, when you enroll in a debt management program, you are showing a good-faith effort to pay your bills on time and get out of debt. These debt management programs will work on your behalf with your creditors, but you must do your part. If you miss a payment, you will bet back at the beginning and usually on your own again, paying penalties and fees and struggling to keep your head above water.