| These not for profit debt management companies | | | | financially. Your financial counselor will act as an |
| offer a great service but how will your credit scores | | | | impartial intermediary. Based on your income they will |
| react? | | | | negotiate and establish a mutually accepted |
| If you are already underwater with debt, it is likely that | | | | repayment plan with your creditors. Upon agreement, |
| your credit score has taken a hit for the worse. When | | | | you make a single payment to the debt management |
| you fall behind on current credit obligations the lenders | | | | company and they in turn make the monthly payments |
| will report these defaults to the credit bureaus. When | | | | to all creditors that were enrolled in the plan. Best case |
| people fall way behind on their bills its often impossible | | | | scenario is that collection calls stop and ultra high |
| to ever catch up. Debt management programs have | | | | interest charges and fees are reduced or every now |
| been around for years and offer help to individuals | | | | and then eliminated altogether. |
| trying to get out of debt. How do they work and how | | | | There are pitfalls to enrolling in the debt management |
| will enrolling in one of these plans affect my credit | | | | plan. We have experienced many situations where the |
| score? | | | | creditor accepted the plan, stopped collections calls |
| They usually begin by setting up an initial consultation. | | | | and even reduced the interest but would not report the |
| Here a financial counselor will break down your | | | | monthly payment to the credit bureaus as the minimum |
| income, living expenses, debts and discuss strategies | | | | monthly payment. More than likely the new monthly |
| to reduce spending and allocate more money to | | | | payment to the creditor is less than what it was |
| paying off your creditors. At the end of the meeting | | | | before as a result of the restructuring program. Each |
| you are given a budget along with an action summary | | | | month the creditor could be reporting you 30 or more |
| plan to help initiate your route to financial freedom. | | | | days late because of it. You'll have no way of knowing |
| Many find that this one time meeting is enough and the | | | | it unless you frequently monitor your credit report. |
| advice of the counselor can be handled out on their | | | | If you are one of the many people in need of |
| own. Others see a benefit in actually enrolling in the | | | | restructuring your debts be sure that you enroll in one |
| debt management program. | | | | of the credit monitoring plans available through |
| A debt management plan is a reasonable way to | | | | Experian, Equifax and Transunion. |
| resolve credit problems and get back on track | | | | |