How does debt management work?
A debt management plan is another means by which some individuals decide to try to get out of debt. With a decreased interest rate you pay a credit counseling agency. The agency will then distribute these funds to the creditors each month. While the interest rate per month is lower with a debt management plan. You actually end up paying more. This is due to the fact that while you are paying less per month, you are paying this amount for a longer period of time. After which you will have paid much more than your initial debt. It is important to fully understand debt management and seek a reputable debt relief firm who can educate and guide you through your best solution.
How are creditors informed that I am in a Debt Management program?
Your Creditors are all notified that you have enrolled with the DM program by the program administrators, along with instructions explaining that they will receive a repayment proposal on your behalf.
How long will it take me to pay off all of my debt?
This depends on your current situation as well as the creditors you owe the money to. The process normally can take from 3 to 5 years. As part of the repayment process, there will be an approximate timeline presented to you.
How does Debt Management impact my credit rating?
Assuming you make your payments in a timely fashion, your credit rating will improve as you progress through the program. By making regular payments, there won’t be any 30/60/90 day late payment notifications placed on your credit report. Some Creditors are willing to show your account as “Current” as long as you continue to make your payments on time through the cycle of the DM program.
Will I stop getting calls from Creditors or Collectors?
If you are late on any current payments, then entering a DM program will make those calls disappear over a period of a few months as long as you continue to make those payments. Some Creditors / Collectors keep better records than others, so it is possible that you may get a call during your repayment period. In these cases you can simply inform them of the plan that you are in and this is almost always enough to cease any future calls.
Can I be sued while in a Debt Management Program?
A Creditor / Collector always has the right to take you to court. If you are on a repayment plan then this is almost always enough evidence to show that you are actively paying down your debt and courts often will rule in your favor. If you stop paying debts, then legal action becomes more of an issue.
Can I use my credit cards while in the Program?
Most Creditors will not want you to use cards while you are repaying. In fact, some will ask you to sign an agreement promising that you will not. It is not a requirement by the DM program to put all your cards in the program. If you are able to wisely use a single card then you can continue to do so.
Like all debt relief options this may not be the best program for you. It is important to fully understand debt management and seek a reputable debt relief firm who can educate and guide you through your best solution.
Let one of our debt relief consultants evaluate your financial situation to determine if Debt Management is right for you.
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