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Credit Education > Debt Management Help > Wisely picking a debt management plan

Wisely picking a debt management plan

By Janet Lacey
Published: Saturday, April 14th, 2012

Plenty of people have a considerable credit card debt. If you are one of these people, you should know that there are companies ready to offer you their helping hand. These companies help their clients build effective debt management plans that avoid bankruptcy, so it is a good idea to ask for their help. However, before choosing a specialized company, it is recommended to take a few details into consideration and to learn a few tips and tricks.

The first step towards building a very effective debt management plan is finding out how big the debt actually is. Some people have paid some bills and forgot about others, so they lost track. You might owe much more than you thought or you might owe much less than you thought. Write everything down on a sheet of paper; put down absolutely everything, including the credit card debts and the loans you took from other banks and financial institutions. You can even take advantage of professional help by contacting the Consumer Credit Counseling Services.

An employee will be at your disposal in order to give you advice regarding what you should do for paying off the debt. Numerous people asked the professional help offered by this specialized Service and they are extremely happy about the result. A consultation with a Consumer Credit Counseling Specialist will show you exactly what you should do. You might have decided together with the specialist that there are no reasons for contacting a company that can help you build a management plan because the debt is not huge and you can contact the creditors yourself. Some creditors are ready to discuss a new payment plan, a more realistic one in order to get their money back. If the debt is big, then it is recommended to hire a specialized company, while if the debt is absolutely huge, then it might be better to file for bankruptcy. Even though bankruptcy is harsh and extremely bad, especially for your credit score, there are situations in which it is better to file for bankruptcy instead of paying off debts for your entire life.

Once you have chosen a debt management plan, you should follow it. Don’t change it after just a few months, as it is going to seriously affect your credit score. Make sure that the management plan you choose is a realistic one in order to avoid getting back in the same situation after just a couple of months.

What you should know is that if you hire a debt management company, the company will contact the creditors on your behalf. They will negotiate the interest rates, trying to obtain lower ones, as well as the payment plans, trying to find something that you can afford. If you thought that the debt management company is going to help you get rid of the debt without paying it, you are wrong. This is not going to happen. You still have to pay your entire debt, but the payment plan is going to be a more flexible one.

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