Our granddaughter has a favorite TV show. Its theme song seems to revolve around the phrase, “it’s jungle out there”. If you’re having a problem with debt, you could feel that you have a jungle out there filled with predatory debt collectors harassing you day and night. These collectors can be absolutely merciless because in most cases, their earnings depend on how much they can collect from you. So their one and only goal is to transfer as much money as possible from your pocket to theirs.
Unfortunately, there are only two ways to handle big debt. You can either declare bankruptcy or pay it off. Thousands of Americans have chosen the bankruptcy option. In fact, I read recently that in the 12-month period ending in September of this year, 1,261,140 people had filed for a chapter 7 bankruptcy. While this does provide a fresh start, I believe there is an ethical issue involved. What it often amounts boils down to is people who handled their credit irresponsibly and then walked away from it – leaving their creditors in the lurch.
The responsible alternatives
There are more responsible or ethical ways to handle big debt and one of the most popular of these is through a debt management plan. While you could create a debt management plan yourself and negotiate with your creditors personally, most people choose to go to a consumer credit counseling agency. Nearly every city has at least one of these agencies and many of them have several. If you live in an area where there is no such agency, you can easily find one on the Internet. However, be aware that some of the so-called credit counseling agencies you find on the Web are basically scams. Do not sign up with any of them until you’ve done your due diligence and made sure that it is reputable and has a good rating with the Better Business Bureau.
Debt management equals debt consolidation
A debt management plan through a credit counseling agency is really a way to consolidate your debts. You will have a counselor who will review your finances, help you develop a debt management plan and then negotiate with your creditors. He or she will also try to get your interest rates reduced. If your counselor is successful and all of your creditors agree to your payment plan, your debts will have been consolidated in the sense that you will no longer be required to pay your creditors. Instead, you will send a payment each month to the credit-counseling agency until you complete your debt management plan.
The good news of a debt management plan
The biggest upside to a debt management plan is that you will have a lower monthly payment than the total of the payments you’re now making. You’ll no longer have to worry juggling numerous payments or how much you need to pay on each of them and on which day of the month because you’ll have just that one payment each month. Your life should be less stressful and you should enjoy a new peace-of-mind.
The bad news of a debt management plan
The bad news of a debt management plan is that it will probably take you five years to complete it, which equals a very long-term commitment. You will have to surrender your credit cards and make sure that you take on no new revolving debt during those five long years. A debt management plan rarely works unless you also create and stick to a budget and learn to improve your money management skills. Finally, you need to make your payments each month and on time or your plan might be cancelled and you’d end up in worse trouble than when you started.
A better alternative
Many American families have chosen debt settlement as a better alternative to a debt management plan. There are several reasons for this, not the least of which is that debt settlement is a more realistic and ethical alternative to filing for bankruptcy and generally costs less than credit counseling services or debt consolidation loans. We have helped thousands of American families become debt-free and with a payment plan they could easily afford. If you would like to learn what debt settlement could do for you, call our toll-free number or fill in the form you’ll find on this page.