Debt Management Service Basics
A Credit Article Contributed by Mark Mcclelland
What is a Debt Management Service
A debt management service provides assistance to folks who've overextended their unsecured credit, helping them pay off their debt in a structured, organized way by developing a plan that minimizes monthly payments, interest rates, and might even eliminate fees and late charges.
A debt management service organization offers you a service, one that you'll usually have to pay for, but one that might well be worth the cost as you'll probably be out of debt mush sooner than you thought possible. These organizations act as liaisons between you and your creditors, working with them on your behalf.
More likely than not, after negotiating with your creditors for the best interest rates and fee structures, the plan will require that you make monthly deposits to the organization, which in turn will pay your creditors in a timely and consistent manner. If you decide to participate in such a plan, it's possible that the service can get your creditors to waive, reduce, or completely eliminate finance charges and harassing phone calls.
And while signing up for a debt management service payment plan doesn't guarantee that your creditors will leave you alone, most will certainly prefer to receive periodic payments than go to court. It's even possible that your creditors will cease any legal activities or suspend judgments so long as they receive regular payments from the debt consolidation service.
The goal here, for you, is to get out of debt and quit being hassled about it, and for your creditors it's to get paid what the're owed; both of these seemingly opposed goals can be met with the aid of a reputable debt management service once you sign up for their service and develop an appropriate workable plan.
There's one additional point that needs to be mentioned here concerning your credit history. If the negative comments on your credit reports are accurate, there's nothing you can do except wait for then to wait for them to go away... something that could take a long as 7 years. And successfully completing your payment plan certainly won't hurt. However, if some of the comment on your reports are incorrect, you should certainly work with the credit reporting agencies to get them corrected or removed.
What Does a Debt Management Service Need to Do It's Job
Basically, a debt management service will need a complete rundown on all your creditors, like account numbers, balances owed, names and addresses, etc., as well as information regarding your current living expenses, income, and any other relevant information that may affect the development of an appropriate payment plan.
How long Does It Take to Complete a Debt Management Service Plan
This depends on the depth of the hole you've dug yourself into, but most plans can be completed within a 3 to 5 year timeframe. This may seem like a long time, but remember that to pay off an $8,000 debt, making minimum payments, with an interest rate of 18%, would take more than 20 years. Which would you prefer? A payment plan with a debt management service and 5 years, or the go it alone approach and 20 years? Not much of a choice is there...
