Will Debt Management Help Resolve Credit Cards and Other Debts?
Oklahoma residents, like many people across the country are struggling with high interest credit cards and other unsecured debts such as store cards, gas cards, medical bills, doctor bills and more. If you are in this situation, you may be searching for information regarding debt management programs, or debt management plans (DMPs) coordinated by credit counselors or debt counselors. In addition, you may also be considering alternative debt relief options such as debt settlement, debt negotiation, or even bankruptcy. It's important to recognize the difference between these debt relief options and the part they can play to help provide relief for individuals and families in need of relief from financial hardship.
Credit Counselors Personalize Debt Management Plans (DMPs)
The goal of a debt management or credit counseling program is to combine or consolidate a consumer's high interest credit cards and other unsecured debts into a single, more manageable payment each month. By taking advantage of the benefits of debt relief such as lower interest rates and the waiving of late fees and penalties, a debt management plan coordinated by a credit counselor or debt counselor is created to help consumers simplify finances, get out of a debt at an accelerated rate, while also saving a substantial amount of money -- through the benefits of lower interest rates.
If you are experiencing a financial hardship and need to explore your debt relief options, you can get your free debt relief evaluation and savings estimate at no obligation.
How are debt management plans (DMPs) created and customized for each individual or family? Typically, credit or debt counselors will meet or speak personally with individuals experiencing financial hardship. They will verify how much total unsecured debt the consumer has. They will then gain a good understanding of the consumer's income level and how much money the consumer can realistically allocate each month to pay down or payoff debts. Finally, they will come up with a personalized debt management plan (DMP) that calls for the individual to temporarily stop using credit cards and make one consolidated payment each month to the credit-counseling agency that will then distributed to creditors one by one. Before this plan can be put in place, however, the plan must be submitted to creditors requesting that they agree to extend the benefits of debt relief to the consumer in need. These benefits can include:
- Lowering Monthly Payments
- Reducing Interest Rates
- Waiving of Late Fees and Penalties
- Consolidating or combining debts into a single, more manageable, monthly payment
- Helping you save substantial money and allowing you to get out of debt in less time than you could on your own if you were to continue paying only the monthly minimum month after month at higher interest rates.
Creditors who agree to the proposals submitted by credit or debt counselors are then added to the debt management plan. It is important to understand that, for creditors who do not agree to extend the benefits of debt relief, consumers are still obligated according to the original terms of their cardholder agreements.
If you need relief from credit cards or other unsecured debts, you can get your free debt relief evaluation and savings estimate at no obligation.
Credit counseling agencies, through certified credit counselors or debt counselors, also can provide a variety of additional debt relief services including help with budgeting, developing good spending habits, financial education and more. Truly exceptional credit counseling agencies will always include a strong educational facet to their program. They will not only help the individual or family get out of debt, they will also help the consumer understand the root cause of the debt issue and provide the education and tools necessary to help consumers put an end to the cycle of debt.
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Debt Management Can Save Money Through Commitment to a Structured Plan
Credit counseling is a proven method for debt relief that has helped many individuals and families, but it's important to recognize that debt management requires basic discipline and restraint to avoid credit cards, on-time consolidated payments month after month, and an overall commitment to stay the course that typically takes three years or more before debts are completely resolved and the debt-free day can be celebrated! That may seem like an extended period of time, but faced with the prospect of a lifetime of debt, just a few years of discipline to get on track financially can save years and years of stress and heartache.
The bottom line: Debt relief does not make debts magically go away but it has provided welcome relief and helped many individuals and families escape the debt treadmill and get on the path to a life of financial freedom! Debt is difficult and in many cases it is unavoidable, but often a debt crisis is made so much more severe due to excessive spending and impulse purchases that can really take their toll on individuals and families -- especially when unexpected events occur.
State Financial Aid Programs
In addition to federal economic relief aid, the state of Oklahoma also has programs available to help consumers in need of relief. As is the case with the federal government, the state does not offer credit card relief programs, grants, or consolidation loans to help consumers pay off their credit card debt obligations.
However, for individuals who are struggling - including low income families, the elderly, and those needing medical assistance the state does offer several areas of support. These programs can help Oklahoma residents in need of food, clothing, medical assistance, housing assistance and help paying utility bills. To learn more about these services designed for low-income families and individuals, regardless of their debt situation, go to the state's homepage Benefits section.
Alternative Debt Relief Options Are Available
A viable alternative to debt management through credit counseling for some consumers may be debt settlement. Debt settlement or debt negotiation is more commonly used by individuals and families who have high interest, high-balance credit card debt -- especially those who are seriously considering bankruptcy. Debt settlement or debt negotiation is a more aggressive form of debt relief that has helped consumers get out of credit card debt at an accelerated rate, assuming the consumer can accumulate money in a "set aside" account which can later be used to extend a settlement offer to creditors. It's important to understand the difference between debt settlement and debt management:
With debt management you are essentially paying off everything you owe, but saving money through much lower interest rates and a waiving of late fees and penalties. The goal of debt settlement is to "settle" with credit card companies for substantially less than you currently owe.
Why would credit card companies consider "settling" with consumers for considerably less than what is owed? If credit card companies decide eventually to "sell off" accounts that are 60 to 90 days late, or more, to a collection agency, creditors may get as little as 10 cents on the dollar, so it is not surprising that credit card companies may be willing to accept a reasonable settlement offer made by you or by a debt settlement company negotiating on your behalf. It is important to recognize that when consumers default on their credit card agreements in order to set aside money in a settlement fund, creditors may threaten or take legal action. In addition, money saved through credit card settlements are subject to federal taxation. Finally, debt settlement typically will have a negative impact on personal credit, but not as serious or long lasting of an impact as personal bankruptcy.
To compare your debt relief options and see how much you could save, take a moment to answer a few basic questions so that we can connect you to a BBB-accredited debt relief provider who may assist you. Prior to enrolling in any debt relief program, it is important to understand clearly how much debt relief can potentially save, how long it will take to realize those savings, and the impact that any debt relief program could have on personal credit and taxes.
To learn what debt relief could do for you and get an estimate of how much you could potentially save - take a moment to answer a few questions online. Get your free debt relief analysis and savings estimate online.