Are you feeling totally overwhelmed by your debts and have no idea as to how to take control of your finances? Have you tried some of the self-help options such as transferring high interest credit card debt to one with a lower interest rate or maybe you’ve tried to “snowball” your debts but with no success?
Consumer credit counseling
If you have been unable to get control of your debts yourself, it might be time to turn to credit counseling. There are a number of benefits to credit counseling as you would be working with a reputable, nonprofit credit-counseling agency staffed with certified and trained counselors. Many of these agencies provide their services free or at a very low-cost as they’re funded by banks, credit unions, credit card networks and civic-minded organizations.
How to find a reputable agency
Whether you go to a local credit counseling agency or find one online, it’s important to find one that will evaluate your finances and then provide you with a plan for helping you get out of debt and avoid financial issues in the future. A reputable agency will review your budget and suggest improvements or additional cuts. It will assess the state of your finances and figure out how you could keep up with your debts. It may revise your budget to generate more cash flow so that you could pay down your debt faster. And if the agency suggests you pay off your debt through a debt management plan (DMP), it will explain in detail how the plan would work and will review its pluses and minuses. A good, reputable credit counseling agency will also give you an idea of how much you will have to pay on your debt each month and how long it will be before you become debt free.
Pay a lot, get nothing in return
Unfortunately, there are some very unscrupulous credit counseling agencies where you pay a lot of money and get little or nothing in return. In fact, many of the people who sign up with those agencies end up in worse shape financially than they were to begin with. These fraudulent agencies often charge excessive fees and try to force their clients into debt management plans they don’t really need.
The dirty secret of debt management plans
While consumer credit counseling agencies can help you get lower payments and better interest rates, it doesn’t come without some negatives. If you use one of these companies to help manage your debts and then try to get a conventional, VA or FHA mortgage, you may be like you had had a chapter 13 bankruptcy. You will have to give up your credit cards and not take on any new revolving debt for the four or five years it will take you to complete your debt management plan. And you’ll need to make your monthly payments without fail or your plan could be terminated and you would end up in worse shape than before you began.
Changing your behavior
According to the financial guru Dave Ramsey, the only real way to handle debt management is by changing your behavior. This means exercising common sense and creating your own debt management plan. He feels it isn’t rocket science as some debt management companies might want you to believe and that it can be done through determination and with a plan that will work.
When common sense isn’t enough
While Dave gives good advice, there are circumstances where common sense just isn’t enough. If you’re really seriously in debt, you may need some “industrial strength” help in the form of debt settlement. In fact, many people consider debt settlement to be superior to a debt management plan because it will actually slash your debt – probably by as much as 40 or 50%. Start a chat or call us today so that we can explain debt settlement in detail and how it could help you become debt free in 24 to 48 months.
