When is the best time to use debt management services? This is an important question, and the answer largely depends on where you are in the debt cycle. Most people start off with credit card debt. If you have excellent credit, then it is probably best to avoid debt consolidation or settlement until you get into the lowest debt stage. It is important to realize, though, that even if you do not have outstanding credit cards, you could be suffering from excessive debt.
At first glance, debt consolidation or debt resolution may appear to be the better choice. A debt management company will negotiate a lower monthly payment with your creditors. Then, the debt management company pays off the creditors on your behalf, normally reducing your monthly obligation. Or, you can roll your current account balances into one easy to manage monthly payment using a debt consolidation service. However, there are disadvantages to both strategies.
A debt management company can often lower your monthly payment by as much as 50%. But, if you are already in a financial crisis, this may not be enough of a benefit to justify opting for debt settlement. Debt settlement does nothing to resolve the underlying problem: high debt costs. A debt settlement service does not reduce the cost of payments. The creditors are not paid, and you are still left with the same debt burden (and the same monthly payment).
Consolidation is a good debt management services strategy if you are juggling several high interest debts. Debt consolidation allows you to lump all of your high interest debts into one lower interest loan. The debt management services will work with your creditors to reduce your interest rates and eliminate up to 50% of your total debt. The result is that you can reduce your monthly payments and get your debt free in as little as three years.
Many debt consolidation services do not offer a debt management program. The best way to find out if the agency offers such a plan is to contact the Better Business Bureau or debt consolidation agencies website and read the comments. Consumer advocates advocate against debt consolidation agencies that do not offer an effective program. (For similar reasons, you should avoid companies that charge you up front fees.)
For those of you who are serious about obtaining a debt consolidation loan, it is wise to use a reputable debt management service that charges a reasonable fee. You can learn more about your lenders’ debt management services and obtain professional counseling online. You may also want to seek advice from credit counselors.
For some people, it makes sense to manage their own debt better. If you have taken on too many credit cards, you may need to establish a monthly budget that you can live with and that gives you some control over your debt. A debt management counselor can be very helpful for someone struggling to make all of the payments on their credit cards each month.
Before deciding on a debt consolidation service, you should research the company thoroughly. Ask for and read all of the fine print. You should also check with the Better Business Bureau and your state attorney general’s office. Make sure you feel comfortable with all aspects of the debt management agreement, and that you truly have considered all other possible debt solutions before choosing to use a debt consolidation service. You may find that consolidating your debt is the best way to go.
If you’re looking for debt management services to help manage your debt, your best bet is to contact a reputable company that offers several different options. The debt management firm should be able to work with you on a payment plan that will work for your unique financial situation. They should explain all of your options and offer support if you’re having trouble making your payments.
A good debt management service is one that will negotiate with your individual lenders to find the best possible debt consolidation agreement for your situation. They should work with you to determine how much money you have to spend each month on paying off your debts. They will then work with these creditors to eliminate late fees, reduce interest rates on your loans and credit card balances and often even reduce the principle.
It’s important to remember that even reputable debt consolidation firms can have an impact on your credit score. A good service should provide you with detailed information about their process and proposed consolidation agreement. They should explain to you how much debt they’re willing to work with you to eliminate. And they should offer you a clear explanation of how the debt consolidation works to improve your credit score. When you use debt management services to consolidate your debt, it helps to keep your debt down and your score up.
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