I am entering into a debt management program with a credit counseling company. I have about $17,500 in debt and my payment with the company would be about $400 a month.

My question is, would creditors be willing to accept 1/2 of the minimum balance that is due actually? I have 3 cards I’m in debt with, $285/month, $185/month, $165/month respectively.

I’m already 2 payments behind with 2 of the cards. Would the credit card companies accept a personal offer of 1/2 the usual minimum for a certain time frame? So I’d offer them $142.50, $92.50, $82.50.

Or since I’m already behind on payments should I stick with the debt management program (I just signed on and have to make my first payment on 2/28) and wait until I’ve been in the program a few months and then try to talk personally to my creditors and see what I can offer at that time??

Please advise. Thanks.

Often times, the term “credit counseling” is used in the same sentence as debt settlement, but actually, it’s a completely different process.

With credit counseling, you will actually work with a credit counselor to pay off your debt in smaller, monthly payments that you can afford.

So, do you really need credit counseling to get you out of debt? You need it if you have been receiving harassing phone calls from bill collectors or if you are unable to make another month’s high interest credit card payments.

Before you attend any credit counseling briefing, it’s important that you choose a good credit counseling agency so that you are not scammed.

Look for a reliable credit counseling agency that is a member of the Association of Independent Consumer Credit Counseling Agencies (AICCCA) or the National Foundation of Credit Counseling (NFCC).

Once you have identified the right credit counseling agency, you’ll have to meet with a certified credit counselor, and provide him with all of the details of your debt.

After a thorough review of your debt, credit history, and a detailed analysis of each of your creditor accounts, your credit counselor will let you know if there is a need for you to enroll in a debt management program.

Once it is determined that signing up with a debt management plan is right for you, your debt management program counselor will negotiate with all of your creditors to reduce interest rates, eliminate late payment fees and lower payments before creating an affordable debt repayment plan that you can live with.

It’s true that working with a credit counseling service can do some damage to your credit report. But if you are at the stage where your last resort is filing for bankruptcy, you would definitely consider a debt management plan in order to avoid bankruptcy or a report full of charge-offs.

If you ever find yourself having problems with paying off your credit card debts, the first course of action is to take a look at the budget. Finding ways to cut back on unnecessary expenses can help you pay down debts and keep monthly bills current.

But what if you can’t settle your debt problems with budgeting? Well, seek assistance from debt help relief options to help gain control over your debts so that your credit rating will not suffer badly.

Debt Consolidation. You may turn to debt consolidation as an answer to your debt problems. Debt consolidation enables you to transfer all your high-interest credit card debts to a lower interest credit card, or you put up the equity in your home to get the money to pay off your debts.

While both unsecured and secured debt consolidation options provide lower payments, they are with some drawbacks. Closing numerous credit card accounts and putting all of your debts into one account can negatively impact your ratio of debt to available credit, lowering your credit score.

And if you use your home equity to secure the money needed to pay off debts, you’re putting your home at an unnecessary risk. You face the risk of losing your home if you fail to make payments.

Credit Counseling. Another popular debt relief option is credit counseling. Credit counseling agencies, non-profit or for-profit, offer help with budgeting, and if it is determined that budgeting is not enough to solve your debt problems, they will sign you up with a debt management program.

A debt management program, also known as debt management plan, involves negotiation with creditors to reduce interest rates, eliminate late payment fees or over the limit charges, and lower payments.

You make one monthly affordable payment to the credit counseling agency’s collection account, and the agent forwards payments to each of your creditors.

A DMP can help you get out of debt faster, but it can also have negative impact on your credit score. As a note is added to your credit report stating that you are in a debt management plan, you no longer can get a new credit card or loan. However, the notation is removed once you’ve settled your debts.

Either you decide to enroll in debt consolidation or a debt management plan, it’s important to make sure you’re dealing with a reputable credit counseling agency that is a member of the Association of Independent Consumer Credit Counseling Agencies (AICCCA) or the National Foundation of Credit Counseling (NFCC).

As AICCCA and NFCC regulate and monitor member agencies to make sure that they operate legally and ethically, you save yourself from being scammed by unscrupulous credit counseling agencies that charge high fees or fail to make payments to creditors on time.

To prevent yourself from facing undue stress caused by spiraling debts and damaging credit score, it’s wise to seek help at the first sign of trouble.

Before you decide to sign up with any of the debt relief options, it’s important to have a thorough understanding of debt consolidation, debt management program or debt settlement plan so you can choose the option that best suits your needs to help you settle your debts.

Debt Consolidation. Debt consolidation comes in two forms; secured and unsecured.

Secured debt consolidation is the action of combining several loans or liabilities into one loan; it takes all of your high interest credit card debts and turns them into one low interest loan.

Often you have to be a home owner to qualify for a secured debt consolidation loan called home equity loan.

With a much lower interest rate than your credit card interest rates, secured debt consolidation enables you to pay on the principle and that thus helps you to eventually get yourself out of debt.

But a word of caution, though. A home equity loan is a secured loan; the bank can take away your house if you fail to make payments.

Debt Management. Credit counseling and debt management agencies, be it non-profit or for profit, work to help you learn to get control of your finance.

Through debt management, you are educated on how to make a budget and stick to it and often help you make a schedule to follow for paying off your debts.

If it is determined that credit counseling is not enough to help you get you out of debts, you will be recommended to enroll in a debt management program.

A debt management program, also known as debt management plan, restructures your multiple monthly payments into one monthly payment, and thus resulting in lowering the total monthly payment previously paid.

When a DMP is recommended, a certified credit counselor will be in charge of negotiating with your creditors to reduce interest rates, eliminate late fees and over-limit payments, and create a manageable repayment plan for you to follow.

A debt management plan is right for me, therefore I enrolled in a free debt management program available in my country last year. I have been in the program since October 2008.

Debt Settlement. Debt settlement is an approach to debt reduction in which the debt settlement company renegotiates the amount of debts you owe with your unsecured creditors and convince them to give up their demands for the full repayment of your debts and instead to accept a lesser amount.

See the difference between debt management and debt settlement clearly; debt management means paying a monthly payment while debt settlement means paying the whole amount up front.

In order for the debt settlement program to work, you have to have a large amount of money on hand for a one time sum. Inability to meet this requirement will probably end up with you getting calls from a collection agency and facing with even more debts.

Debt consolidation, debt management and debt settlement are often favorable debt relief options because they allow you to get out of debt faster without having to declare bankruptcy.

I understand. I have been in your shoes before enrolling a free debt management program in my country.

OK, take a breath and look at your debt with a clear head. Is your debt so unmanageable that you can’t even make next month’s minimum payments? If so, you should consider either credit counseling, debt consolidation or a debt management program.

Debt management program, also called debt management plan, is a program designed to help you get out of debt by combining all your multiple debts with various interest rates into one monthly repayment that you can afford.

This means no more driving to different banks to pay various cards on different due dates. In a debt management program, you just need to make One monthly payment to One agency on One due date!

The affordable monthly payment that your certified counselor works out with you is a fair amount of cash so that you have some extra money saved for yourself as emergency fund.

Once you are placed in the debt management program, all your creditors will cancel your card accounts. This is good because you will have no way to add new credit card debt to your existing debt; no excuse to use them for so called ‘emergency needs’. If you have no credit cards, you can’t be tempted to use them.

Once you have extra money left every month, it’s important to start saving 5%-10% of your income as emergency fund. As for new purchases, save until you have enough money to buy them with cash. Remember the immediate gratification of making purchases through credit cards that threw you into the deep debt hole? You wouldn’t want it to happen again.

If you are able to stay in the debt management program until your debt is paid off; do not add new debt to existing debt; and save up the extra money for emergency fund, it’s for sure that you can make your way out of debt pretty soon.

A credit counseling agency, either non-profit or for-profit, offers you credit counseling advice including how to use credit lines wisely; establish a workable budget; keep track of your bills; and best manage your money.

During a credit counseling session, a certified credit counselor will first gather as much information about your income, expenses and debts as possible. Once he has sufficient information from you, he will evaluate the information, discuss your situation with you and offer the most appropriate debt management advice for your situation to help you rectify your financial problems.

If it is determined that participating in an educational class is not sufficient to help you get back on the track to financial security, you will then be recommended to enroll in a debt repayment plan.

Debt management plan is also known as debt repayment plan.

When choosing a credit counseling agency, it’s important that you spend enough time researching and picking the most reputable agency.

Most important of all, look for a credit counseling and debt management agency that has satisfied clients, offers personalized service from certified counselors, educates you how to make appropriate financial choices and provides you with the tools you need to achieve financial security.

Remember, the best credit counseling service agency needs not have a big advertising campaign. Don’t be tempted to think that just because it has a big advertising campaign, it is the best.

A reputable and reliable credit counseling and debt management company normally relies on past clients for referrals rather than soliciting business through constant television ads, infomercials and telemarketing or spam e-mails.

It’s too late for me to be debt free fast with credit counseling or DIY debt management, but it’s not too late for you, right? Don’t wait until you need to enroll in a debt management program, debt settlement plan or declare bankruptcy.

I had to resort to joining a free debt management program after failing to see much decrease in my credit card debt. Month after month I threw in chunks of my hard-earned money into making the minimum payments, yet the total credit card debt didn’t seem to drop much.

Was it because I kept adding new credit card debt to my outstanding balance? Noop. It’s because of late payment fees, over-limit charges, cash advance fees, retail interest charges, and miscellaneous fee charges that kept being added into my total debt.

Scary, right? To avoid letting these horrendous fees imposed by banks and credit card companies drags you into a deep debt hole, you need debt management tips to help you get out of debt fast.

1. Credit Counseling. Seek help from a certified credit counselor who can help you navigate through your debt dilemma.

You can either opt for a non-profit credit counseling agency or a for-profit credit counseling company when it comes to credit counseling. The difference is that the former provides free counseling and charges a nominal monthly fee if you decide to enroll in a debt relief program while the latter charges quite exorbitant fees.

2. Debt Consolidation Loan. You should only consider a debt consolidation loan if you are not able to replace your high interest credit cards with one, low interest rate credit card. This is because you may have to pay for an application fee for a debt consolidation loan, whereas with a credit card you would not.

3. Home Refinancing. Refinancing your mortgage allows you to save hundreds of dollars per month on mortgage payments. With lower mortgage payments, the money saved could be used to pay off your credit card debt.

4. Home Equity Loan. Alternately to home refinancing, you may have enough equity in your home to cash out and pay off your debt. Most importantly, credit card debt is not tax deductible, but a home equity loan is. This means you can reduce your debt as well as reduce your tax obligation by cashing out.

See, you have some viable solutions to help you get out of debt fast without resorting to any debt management program, debt settlement plan or bankruptcy that damages your credit score.

According to financial experts, you probably do not need any debt consolidation or debt management if you are able to make your current payments and have reasonable interest rates.

However, if you are suffering from so much unmanageable debt that you are unable to make ends meet and make even the minimum payments, then there is a need for you to really consider if a debt consolidation loan or a debt management program is right for you.

What’s the difference between a debt consolidation loan and a debt management plan?

Debt Consolidation. Debt consolidation is a process where all your multiple debts and loans like credit cards, car loans and other high-interest debts are lumped into a loan with one monthly payment with lower interest rate. With reduced monthly payment and interest rate, you can pay off your credit card debt faster.

The catch is such loan requires that you own a house, so that the loan can be taken against equity in the home. There are risks involved with putting your house up for collateral on a debt consolidation loan.

If unfortunately something unexpected happens to your income and you find that you can’t make the proposed loan payment, you could lose your house.

This is one of the major reasons why I opted for a debt management program rather than debt consolidation.

Debt Management Program. During a free consultation, a certified credit counselor will only recommend a debt management program after going over your income and expenses and finding that credit counseling is not enough to bring your financial back to a manageable level.

If it is determined that a DMP is right for your, the credit counselor will negotiate with all your unsecured creditors to obtain the lowest monthly obligation that satisfies all your current accounts.

Being put in a debt management program means that you make only ONE payment with reduced interest rate to One credit counseling agency on One due date; you no longer have to be stressed by paying multiple credit card payments to various banks on different due dates.

Most important of all, all late payment fees and over-limit charges are waived once you are in a debt repayment plan. No more harassing phone calls from banks, warning notices from creditors and annoying visits by third party collection agencies.

No matter which debt relief program you choose, be it a debt consolidation loan or a debt management program, your ultimate goal is to pay off all your debt and bring your finances and credit score back to the right track.

I understand how you feel now. I was in the same situation with about $13,000 in credit card debt before I enrolled in a free debt management program in my country.

$13,000 is equal to RM45,500 in my country’s currency. It’s a huge credit card debt that my hubby and I no longer could go on paying. High interest rates, late payment fees, over-limit charges, cash advance interest charges, retail interest charges were pumped into our existing credit card debt month after month mercilessly.

Phone calls made to banks and letters faxed to credit card companies asking for lower interest rates were either ignored or granted with a drop of one point or two points from 18% to 17% or 16% that made no difference at all.

Thinking of late payment fees, over-limit charges, cash advance interest charges, retail interest fees and other miscellaneous fee charges just drove me crazy.

If you have been thinking of declaring bankruptcy to get rid of your debt, think twice. There are better financial relief programs that you can consider before resorting to filing for bankruptcy.

I used to think that going bankruptcy would be my only solution to get rid of the credit card debt. Apparently I was wrong.

You know, you can consider credit counseling, debt consolidation or debt management program to help you find financial relief.

Make sure you find the National Foundation for Credit Counseling (NFCC)’s nonprofit affiliate, usually known as Consumer Credit Counseling Services (CCCS) for a debt management program.

Legitimate credit counseling agencies are affiliated with the National Foundation for Credit Counseling (NFCC) or the Association of Independent Consumer Credit Counseling Agencies (AICCCA).

There are simply too many fly-by-night companies that disappear with your money or leave you with more debt that you have to be careful when it comes to choosing a reliable credit counseling and debt management program agency.

Well, answer a few questions here:

1. Have you been paying off your balance in three months when it used to take one month?

2. Do you always not know the amount you owe until your bills arrive?

3. Have you been maxing out your credit cards regularly?

4. Have you been paying bills with card cash advances?

5. Have you been paying off one credit card bill with another credit card?

If you answer Yes for most of the questions and you have only been able to pay just the minimum amount for your credit cards every month, this may indicate that you are in deep debt trouble and in need of a credit counseling session with a debt management counselor to educate you on how to budget and keep your debt under control.

If after going through a very thorough review of all your bills, income and expenses and the credit counselor finds that you can’t earn quite enough to make ends meet, he will suggest you to enroll in a debt management program.

Once it is determined that you need a debt management plan to help you pay down your outstanding debt, the certified credit counselor will start negotiating with your creditors to reduce the interest rates and waive the late payment fees and over-limit charges.

By combining your multiple credit card payments into one smaller and more affordable monthly payment, you don’t have to worry the possibility of going into further debt or into bankruptcy.

And when you have completed your payments that take approximately between 36 to 60 months, they’ll help you reestablish your credit.