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How do I Choose the Best Debt Management Programs?

Article Details
  • Written By: Malcolm Tatum
  • Edited By: Bronwyn Harris
  • Last Modified Date: 14 February 2020
  • Copyright Protected:
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    Conjecture Corporation
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Debt management programs are one of several financial strategies that consumers can use to reorganize debt that has become extremely difficult to deal with, often by providing a framework for working with current debtors to create alternative repayment plans that will fit into the budget. In the best of scenarios, a debt management program helps a consumer avoid bankruptcy and get rid of debt in a timely manner, while also helping the client develop a better understanding of how to budget his or her income. Since not all debt management programs are equal, choosing the right one involves assessing the track record of each program under consideration, evaluating how the plan works, and ultimately determining if this is an organization that your creditors are willing to work with.

When first beginning to evaluate different debt management programs, take the time to find out what others think of a given plan. Look for consumer comments online, as well as get feedback from watchdog agencies that monitor these types of programs. Doing so will help you avoid many of the so-called debt management plans that are borderline scams and make it easier to focus on legitimate plans that are likely to help you improve your financial situation.

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Many legitimate debt management programs also include a financial counseling component that aids consumers in creating workable budgets as part of the overall plan. Focus your attention on programs that not only want to serve as your advocate with your creditors, but also want to help you learn how to budget responsibly and spend your money wisely. The best programs do not want to see you come back in five years with more debt issues on your hands; they want to help you straighten out the current crisis, get you back on your feet, and make sure that you don’t make the same financial mistakes again.

Another consideration is the type of fees charged by each of the debt management programs on your list. Many will factor in a payment for their services when developing the amount you remit to them for distribution to your creditors each month. Make sure you agree that this monthly assessment is within reason for the services provided. In many cases, the monthly fee is rather modest although there are some debt relief programs that are quite expensive.

A key factor is how well each of the debt management programs do when it comes to working with your creditors. The fact is that some credit card companies and other creditors will not work with any debt management plan, meaning you will still have to deal with them directly. Other creditors may have a short list of plans they will work with. Going with a program that is acceptable to all or at least a majority of your creditors will enhance the chances of success, allowing you to gradually reduce your debt load and eventually retire all your current debts.

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