Differences Between Debt Relief Programs and Debt Management Companies
The best debt management companies should be affordable, reputable and work diligently for you. Working with a good debt consolidation company should help make life easier. However, it is not just a matter of working with them; they must also be the right one for you and your circumstances. Research debt consolidation companies to assist you in sorting through all of the relevant information out there. Take your time, do your homework and you should be in a much better place to make an informed decision.
When looking for the best debt management companies, try to find a counseling service that does not try to sell you anything. The most important service any counseling service can provide is information and education. A debt counseling program should first help you determine if a debt consolidation program will benefit you and secondly educate you on budgeting and money management. There are a number of very good counseling programs that will not try to sell you anything else.
The best debt management companies offer a free consultation and may even offer a free assessment to assess your financial situation. Once the company has assessed your situation, they will be able to assist you and counsel you on how to get back on track with your finances. There are several reputable and free counseling services available. These include:
o Credit Counseling. A credit counseling service will work with all of your creditors. They will help consolidate all of your unsecured debts into one single payment. The credit counselor will communicate with your creditors on your behalf and attempt to lower interest rates and eliminate any late fees and penalties. Your interest rates will be lowered by all of the creditors, not just one or two.
o Debt Settlement. Debt settlement is a service offered by some of the best debt management companies. It is a way for you to have lump sum payments taken out of your paycheck. This money is used to pay off your creditors in one lump sum. This is a great alternative to bankruptcy but it will leave a scar on your credit report for up to seven years.
o Student Loan Debt Consolidation. There are a number of reputable and good debt management companies that offer student loan debt consolidation programs. A student loan consolidation program will allow a student to combine multiple monthly payments into one payment. This is a great option for paying off credit cards and other unsecured debts. These programs will also result in an interest rate that is lower than the average.
o Debt Consolidation Counseling. If you are interested in finding reputable and legitimate debt counseling then there are a few things that you should be aware. There are a number of nonprofit organizations that provide free or low-cost counseling. These organizations will work with you to find a better way for you to manage your debt, if that’s the best route for you to take.
No Monthly Fee. Debt management programs and counseling can require a monthly fee; however, the good ones are not likely to charge you an interest rate. Some of these companies will require a yearly membership fee; however, many of them are not affiliated with any company that charges a monthly fee.
o Debt Settlement Programs. A reputable company will not require a down payment or other upfront payment in order to begin debt settlement programs. They will, however, work directly with your creditors to reach agreements that will lower the total amount of money you owe. Reputable companies will inform you of any negative results from this process and let you know that you will still owe the creditor some money even after you have reached a settlement. A reputable company will also explain all of this in clear and concise language.
o Eliminate Your Debts. You can save money by consolidating all of your debts into one monthly payment. By doing so, you will save money over the life of the loan. If you were using multiple credit cards and were adding an interest rate onto the interest you were paying on each card, then you would end up spending more money. You will save money by having just one payment to deal with.
So, what is the difference between using a debt settlement program and a debt management company? It is your money. When you go with a company to consolidate your credit card debt, you are simply saving that money instead of spending it. You can still spend the money on your desired purchases. When you go with a debt management company, you are going to save money by reducing the interest you pay and making larger payments that will save you money in the long run. Of course, you will be required to make these payments for a longer period of time in order to get out of debt.