How to Choose a Debt Management Agency |
By Kenneth Long on December 7, 2010
.jpg.aspx?width=75&height=75) Not every debt management agency is as effective at helping you eliminate debt. When your primary concern is lowering your credit card payments, it can be tempting to focus solely on the agency that quotes the lowest estimate. That could be a mistake!
The lowest estimates tend to come from so-called debt relief companies. However, these are debt settlement companies that have been hammered recently by state and federal regulators for making false and deceptive claims about debt reduction, pennies on the dollar settlements and other unsubstantiated claims that turned out to be outright lies. They may quote the lowest payment, but their programs do not work.
Next are overly optimistic debt management agencies. They tend to quote a payment that is initially low. However, they often fail to account for any finance charges that you incurred within the last 30 days that may have affected your balance. Too often, they ignore your due dates and simply sign you up on their plan without tailoring it for you.
These types of debt management agencies are frequently referred to as "DMP mills", since their primary goal is to sell you on a debt management program whether or not it is the best option for you. Many of their clients must go through one or two rounds of payment increases in order to meet minimum requirements, and end up with a higher payment due to accrued interest and late fees incurred as a result of ignored payment dates.
The most effective type of debt management agency is the one that employs Accredited Financial Counselors. These trained and experienced counselors pay attention to the smaller details in your situation that can make a big difference. They often factor in a small amount extra as a buffer for additional interest charges that tend to push individual card payments up by a couple of dollars. Additionally, they pay attention to your due dates to make sure that accounts are not reported late during the transition into a debt management program. While the initial quoted payment might be a few dollars more than other quotes, you will soon understand why their programs are effective.
To confirm your opinions, make sure that you check their reputation and experience. Is the agency accredited? Are the counselors accredited? Do they have a good BBB rating? These are all good questions to ask as you choose an agency.
Debtors Unite partners with debt management agencies that provide financial counseling, community education and volunteer services in the community. Find out why the best debt management agency will be the one that spends time with you to create the best action plan for your needs. You will be glad that you did.
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