Debt Management Plan - Ohio
For many residents in Ohio and other states, credit card debt has made such relief programs as a debt management plan a consideration for any number of reasons, including unemployment, medical emergencies, or personal hardships. If you have also amassed a mountain of debt that you are struggling to make payments on, you may be interested in how a debt management plan, or DMP, can help you get debt relief.
Also called debt consolidation, a debt management plan allows you to combine your multiple credit card debts and other unsecured debts into a single, more structured, and more manageable payment plan made to a credit counseling agency. While this is a smart move for many consumers, it is not the only debt relief option available. For some, debt settlement may be another alternative.
What debt settlement involves is negotiating, or settling, with credit card companies for significantly less than what is actually owed. In these tough economic times, more and more Americans have made debt consolidation and debt settlement popular alternatives to bankruptcy - which causes a more damaging and longer lasting impact to your personal credit.
If you want to explore how debt relief can help you, request a free debt relief analysis and savings estimate.
Understanding How Debt Management Works
While the circumstances that have led many consumers deeper and deeper into debt certainly vary, one thing is certain - debt won't just magically disappear. If you are also feeling the weight of never-ending credit card debts and are going nowhere with your payments, there is good news. A debt management plan, or debt consolidation, is one of your many options that can provide much-needed debt relief.
Facilitated by credit counselors, debt management typically begins with a thorough review of your outstanding debts and a determination of how much of your income that you can reasonably dedicate to paying off your debts. Credit counselors typically develop a game plan to help you pay off your debts at an accelerated pace. They do so by submitting proposals to your creditors asking for a reduction in interest rates or a waiver of any late fees and other penalties.
The goal is, with a more affordable and structured payment plan, you can ideally direct more of your payment into paying down the principal on your debts versus just the interest.
Is Debt Settlement Your Alternative?
Debt settlement as a form of debt relief is, fundamentally, a different approach than debt consolidation through credit counseling. With credit counseling, you are paying the entire amount of your debts with more lenient payment terms; with settlement, you are hoping to settle, or negotiate, with creditors for substantially less than what you owe. Many credit card companies view debt settlement as a viable alternative to selling off "bad debt" to third-party debt collectors who often pay them as little as 10 cents on the dollar.
For many consumers, debt settlement is a smart financial move, but it also has potential drawbacks: When you enroll in a debt settlement program, for instance, you will be typically advised to stop paying your credit cards and start accumulating funds over a certain period of time that you can later use to make a reasonable settlement offer. In this scenario, when you stop paying credit card companies, you run the risk of being sued for, essentially, defaulting on the terms of your credit card agreements.
In addition, when consumers settle with a credit card company, those that generally had good or excellent credit prior to debt settlement will see a decline in their credit ratings. However, in spite of the risks to their credit score, the impact of debt settlement is still not nearly as severe or long lasting as bankruptcy.
Choosing a Debt Relief Company
If you are ready to take the next step in regaining control of your finances, a reputable debt relief company or agency can certainly help you. As you explore your debt relief options, whether it be debt management or debt settlement for instance, do your due diligence. It is generally recommended that you review a company's Better Business Bureau (BBB) rating to find out the company's track record of customer service.
The bottom line is, if you are overwhelmed with credit card and unsecured debts, you have many debt relief options such as - a debt management plan (also knows as debt consolidation) or event debt settlement. These programs are available and could help you pay down your debts. Compare your debt relief options by getting a free debt relief analysis and savings estimate.