Tag Archives: monthly payment

Debt Management Program Or Debt Consolidation?

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Posted by Vedis the DMP Blogger on July 13, 2009 – 8:05 am
Filed under Debt Consolidation Loans, Debt Management Programs

Should you consider debt consolidation or debt management program in this economic slowdown where you are faced with threats of job loss, falling portfolio values, and rising costs of consumer goods?

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.

Seek Help From Credit Counseling Service Or Debt Management Program?

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Posted by Vedis the DMP Blogger on July 8, 2009 – 2:03 am
Filed under Credit Counselors, Debt Management Programs

Are you tired of paying a pile of debts that just don’t seem to decrease as time goes by? If so, seek assistance from credit counseling service to help manage your debts or enroll in a debt management program to pay off your debts without stress.

Getting help from credit counseling service doesn’t mean that you must participate in a debt management program. You do not need a debt management plan if a credit counselor determines that you just need a little advice on budgeting and money management.

But if your unsecured debts including student loans, payday loans and credit card debts are out of control, then you need a qualified debt management program counselor to take time to go through your debt and income levels, discuss debt relief options for getting out of debt, and explain the pros and cons of a debt management program to you.

Beware of credit counseling agency that enrolls you in a debt management program automatically without providing assistance with budgeting and money management!

Once it is determined that a debt management plan is the right debt relief plan for your financial situation, the credit counselor will start negotiating and creating a payment schedule with each of your unsecured creditors in an attempt to lower the total amount of money owed, reduce your interest rates, and have all late fees and over-limit charges removed.

Make sure the monthly payment that the debt management counselor works out for you is an amount that you can afford; a debt management repayment which is higher than what you can afford each month is not going to help you make any progress.

Debt Management Programs & Debt Settlement Plans – Financial Relief Options

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Posted by Vedis the DMP Blogger on July 4, 2009 – 2:03 pm
Filed under Debt Management Programs, Debt Settlement Plans

Debt Management ProgramsHave your bills overwhelmed you and you have no idea what to do? Don’t worry there are two financial aid relief options available to you – debt management programs and debt settlement plans.

Of course, if given a chance, you don’t want to have to resort to either of these financial relief programs in your lifetime.

Debt Management Programs. Debt management is a program where a consumer credit counseling service company combines all of your debts into one big sum and works out a monthly payment that you can afford. You pay this lower monthly repayment until all the debt is gone.

All the major credit card companies will work with a debt management program rather then see you go into a collection agency.

There is one catch though. During the course of your debt management program, you cannot apply for new credit of any kind anywhere.

Debt Settlement Plans. Debt settlement differs from debt management as instead of paying a monthly payment, you pay the whole amount up front.

In order for this 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.

If neither of the debt relief programs is what you want, then just keep your bills paid on time.

The primary difference between a debt management program and a debt settlement plan is whether you credit score will get hurt.

So, will joining a debt management program or debt settlement plan negatively affect your credit score?

Credit card debt management program usually leaves you in better shape with an easier time of restoring your credit while while debt settlement usually leaves your credit in a blasted wreck and takes a while to restore.

As you know that bad things do have a tendency to happen when you are least prepared, just keep in mind you do have these two choices.

Debt Management Program Or DIY Debt Management?

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Posted by Vedis the DMP Blogger on June 27, 2009 – 4:15 am
Filed under Debt Management Companies, Debt Management Programs

“Hi, I am curious as to why you opted for a debt management program through a credit counseling and debt management agency.

Much of what a debt management company does only involves contacting your creditors and negotiating alternative repayment plans with reduced interest rates and fees that you can actually do it yourself.

Most creditors will be eager to agree with lower repayments and reduced interest rates as they don’t want you to declare bankruptcy.”

I have been asked by a few US and UK blogging pals why I enrolled in a DMP while I could actually do the debt management myself.

First off, the banks and creditors in my country are more heartless and money sucking than those banks and creditors in the US or UK.

Before I enrolled in the free debt management program, I did call up or write in asking for alternative repayment plans with lower monthly payments and reduced interest rates. Unfortunately, some didn’t bother to reply while some came back with interest rates that I considered still very high.

Most creditors agreed to reduce the finance rate from 18% per annum to 15% or 13%. The lowest interest rate was 9% per annum and it’s from a bank that I had been making my monthly credit card payment more consistently.

Guess what the creditor counselor was able to negotiate with the banks? The interest rate was reduced by many points, between 6% and 7% by most of the banks and only one bank insisted on 13%.

The low interest rate is a huge help since I had been paying 18% or more, and had also been late on more accounts. The reduced APRs can save me thousands of dollars in long run.

As for lower monthly payments, NONE of the banks wanted to reduce the monthly payment from $150 or $200 to $50 or $60 when I did the debt management myself. But when it’s the credit counseling agency that did the negotiation on behalf of me, they were willing to reduce the monthly payments.

You may think that it’s because I pay enrollment fee and a monthly service fee to the agency that it’s easier to get things done. No. Free of charge.

I am in a free debt management program and agency set up by the government to provide financial counseling and debt management to individuals as well as financial education to help individuals take control of their financial situation.

In the US, you have non-profit and for-profit debt management companies that charge initial fee and a modestly monthly fee, but in my country there is only ONE credit counseling and debt management agency and its debt management program is free of charge. :-)

Debt Management Programs Versus Debt Settlement Plans

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Posted by Vedis the DMP Blogger on June 9, 2009 – 9:11 am
Filed under Debt Management Programs, Debt Settlement Plans

If you’re in debt up to your ears then you’re probably trying to do something about it. There are many options but essentially it comes down to debt management programs versus debt settlement plans.

Although neither of the debt relief options is really something you want, it is sometimes necessary to have a better understanding of the two.

Debt Management Programs. Debt management programs essentially do what they say. The credit counseling and debt management agencies take all your bills, compile them into one lump sum, and then you make one monthly payment on that.

Sometimes however certain debt collectors will not want to work with debt management programs because it means they will get less money. Most prefer to work with major debt management groups.

During debt management usually you cannot apply for any credit cards or lines of credit with banks or credit card companies. This will last until the debt repayment program has been completed.

Debt Settlement Plans. Debt settlement is where the debt settlement companies take your money every month, but don’t make monthly payments to your creditors. Instead, they put it in a trust account, negotiate your debts with your creditors and then make a lump-sum payment when there’s enough in your account to pay a creditor in full.

Take note that debt settlement companies do not ask your creditors to stop all interest charges, late fees and over limit fees from accruing. This means while the negotiations with your creditors are ongoing, your bills will continue to grow!

If it’s so unfortunate that you’re sued and a judgment is brought against you, you’ll owe more money than before!

The process of a debt settlement can also damage your credit depending on the size of the debt. If you cannot make it usually you are turned over to a collection agency, or your goods are repossessed.

The one major difference between debt management programs and debt settlement plans is your credit. If you go with a debt management plan, your credit in most cases will be wiped clean and you can start rebuilding it. If you use a debt settlement plan however your credit will be badly damaged and you’ll have to start picking up the pieces and superglue them back together.

You usually won’t consider either of them unless you’re in financial trouble. Which, if that’s the case then you’re going to be paying attention to the differences between them. Just remember management equals monthly payment, settlement equals one big lump sum.

If neither of the debt relief options is really something you want to end up doing, then you should always try to keep your debts paid down to avoid having to resort to either a debt management program or a debt settlement plan.

You Can Be Debt Free With A Debt Management Program

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Posted by Vedis the DMP Blogger on May 5, 2009 – 6:38 am
Filed under Credit Counselors, Debt Management Companies, Debt Management Programs

Credit Card DebtWith the unemployment rate and consumer debt continuing to rise, the number of people seeking credit counseling services, enrolling in debt management programs or filing for bankruptcies is on the increase.

You may think that those who are jobless and can’t pay the bills are the ones who are keeping the phone lines ringing at credit counseling agencies across the nation. Well, not really. People who are still working but are caught in a debt spiral and unable to pay next month’s bills are also calling for help.

If you are on the verge of bankruptcy and you badly need to avoid filing for bankruptcy, make an appointment with a certified counselor from a reputable credit counseling company and let him help you review your financial situation.

A good credit counselor will take time to review your unsecured debt, such as credit cards, medical bills and personal loans, and secured debt, such as mortgages and car loans, as well as household expenses and personal income to find the best debt relief option that works best for you to pay off your debt.

Make sure you avoid debt management counselor who promises to enroll you in a debt management plan in less than 20 minutes! Remember, the less time spent with you, the less a credit counselor works in your best interest.

Most of the time, you don’t need a bankruptcy. There are debt relief programs such as debt consolidation, debt management programs or debt settlement plans to get you out of debt without declaring bankruptcy.

A debt management program, be it non-profit or for-profit, is designed to help you restructure your multiple payments into one smaller monthly payment that you can afford after your credit counselor negotiates with your creditors and establishes a debt repayment program.

The smaller monthly payment allows you to make the payments and not go into further debt or into bankruptcy.

You can be debt free with a debt management program without the terrible blemish of a bankruptcy on your record.

Note: I am a credit card debt woman who has been in a free debt management program since October 2008 and have felt the benefits of debt management program, so it’s easy for me to share with you about DMP more than debt consolidation and debt settlement plans.