By Wendy Clay on November 23, 2011
.jpg.aspx) Debt management corporations provide support and guidance to debtors attempting to eliminate their debt burden. They offer debt management counseling, negotiate with creditors and collection agencies to secure lower interests rates and waive fees for borrowers, and develop debt management programs that enable debtors to manage and reduce their unsecured debts from sources including medical bills and credit cards. These debt management programs, which require the consumer to deposit funds into specific accounts which the debt management corporation then accesses to pay off the consumer’s debt, can provide invaluable assistance to people who:
- Have multiple bills and find themselves incapable of managing them properly.
- Have attempted self-repayment plans and are still buried in debt.
- Are experiencing a financial crisis and need to have their debt burden decreased.
- Wish to end collection calls.
- Desire lower interest rates.
- Can not afford to pay more than the minimum payments on their debts.
In order to obtain the best possible service from a debt management corporation, it is important to research the backgrounds of multiple corporations. When researching, check each potential company’s profile and their service background, and, if at all possible, attempt to speak with one of their former clients to hear what their experience with that particular corporation was like. Also check to see:
- Whether the corporation has a membership with the Better Business Bureau (if you plan on enrolling in an online debt management program, check to see if the company is a member of the online Better Business Bureau);
- If they have national accreditation;
- If they have been in operation long enough to have developed a track record, and whether this track record includes regulatory suits;
- What services they offer and whether they offer free information describing these services;
- Whether they are designated as a non-profit or for-profit organization, and if they are for-profit, what fees are associated with their services;
- How they obtain money to pay your creditors (i.e. do they want you to pay them directly, open an account exclusively for the purpose of paying off your debts, etc.)
- Is the corporation licensed to operate in your state and are their consumer debt counselors required to obtain certification/accreditation or do they merely receive a training;
- How are the counselors paid (by commission vs. by results).
Once you have decided on a debt management corporation, they should take the time to review your circumstances and aid in the development of a budget to properly manage your money and provide a written debt management plan that explicitly explains how creditors are to be paid and lays out realistic goals for restoring your financial health. Once you and the debt management corporation develop a debt management plan, directly contact your creditors to ensure that they have actually received and accepted the plan before making any payments to the debt management corporation. Once you do begin making payments, continue to check your bills from your creditors to see that they reflect payments, if not the debt management corporation may be funneling your money elsewhere (i.e. into their own pockets). Finally, be sure to make timely payments and notify the corporation when you encounter instances when you will be unable to make a payment.
Hopefully, the information above will make finding a reputable debt management company easier to undertake, because once that is accomplished, debt elimination becomes a much easier task.
Sources:
Debt Management 101: What Is Debt Management and Is It for Me? Consumers Alliance, 2008. Web. 3
Nov. 2011 <http://www.caprocessing.com/debt-management.html>.
Debt Management: Repay Debt without Hurting Your Credit. Debt Consolidation Care, 2011. Web. 2
Nov. 2011 <http://www.debtconsolidationcare.com/debt-management.html>.
For People on Debt Management Plans: A Must-Do List. Federal Trade Commission, Dec. 2005. Web. 3
Nov. 2011 <http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre38.shtm>. |