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Debt Management Program

A debt management program is designed to help you regain control of your financial circumstances. The goal is to lower your payments and interest rates on accounts you have with creditors who qualify for the program. Debt management services, also referred to as credit counseling, are advertised everywhere. You’ve seen the commercials where someone is getting calls from creditors and collectors, conveying a rather stressful situation, only to have a debt management service come to the rescue.

When a debt management program can provide the relief you need, it can be a great solution to an otherwise anxious situation. However, in recent years, debt management programs have been having a difficult time in providing people with the relief they really need.

For example, let’s say you have $10,000 in credit card debt, and you’re currently making payments of $300 each month towards all of those credit cards (3% of the total debt). A debt management program will be able to lower your payment to about $200 to $275 a month (based on an average range of 2% - 2.75% of your total credit card debt). This would save you between $25 and $75 each month. The question is, “Is this enough to really regain control of your financial situation?”

If you’re wondering how a debt management program can lower your payment like this, and also help you pay off all of your credit card debt in an average of 5 years, the answer lies in the fact that they also slash the interest rates on credit card debt considerably, typically to single digits APRs. But most people are more concerned about the total they have to pay each month. There’s too much month at the end of the money and lowering payments is what they really need.

If you’re paying about 3.5% - 4% on your total credit card debt balances each month, then its possible that a debt management program can provide enough savings so you can comfortably make the payment to the debt management program. This is important because if you can’t make that new lower payment comfortably, then it’s possible you can wind up like a statistic and have to quit the program, a predicament many people find themselves in. So, even if interest rates are lowered, it does you no good unless the new payment is one you can easily handle, month after month, for as long as 5 years.

The terms offered by these types of service is dictated by the creditors themselves and, as a result, offer limited flexibility to you, the consumer. Your budget will still have to conform to the creditors demands in order to satisfy the program offered by debt management and credit counseling companies. Not to mention that most debt management programs charge fees on top of those new, lower payments. These fees can put the payment required out of reach. Especially when you consider that the program can last as long as 5 years.

Debt settlement, on the other hand, offers somewhat more flexibility as the debt settlement provider isn’t bound to the terms mandated by the creditor. While debt settlement isn’t a “magic bullet,” it has helped tens of thousands of people avoid bankruptcy and maintain their dignity. If you’re falling just a bit behind on your bills, and need just a little more breathing room, then debt management or credit counseling may be able to help. But, if you’re more than just a bit behind, debt settlement may be the way to go.

There are many debt settlement companies offering programs to help consumers with their financial problems. But, as far as I can tell, Superior Debt Relief Services does a great job, and they satisfy the “6 Keys You Should Look For When Hiring A Debt Settlement Company” I outline in my video. Click here to see a quick outline of those 6 keys.

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