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What is Debt Management
A Debt Management Program is a consumer credit counseling service helping individuals consolidate unsecured debt into one easy payment so that they can get out of debt in 3 to 5 years. In addition to lowering monthly payments, many creditors will reduce or eliminate interest and stop charging late fees. Most importantly, past due accounts can be brought current in many cases. You can always pay more on these programs if you want to get out of debt faster. There is no prepayment penalty.
Debt consolidation may be able to help you:
- Lower your monthly payments
- Reduce interest rates
- Waive late fees
- Reduce or Eliminate collection calls
- Avoid bankruptcy
- Have only one monthly payment
- Become debt free
What debts are included in a Debt Management Program?
Unsecured debts like medical bills, credit card bills, Sallie Mae student loans, unsecured loans etc, are included in a debt management plan. However, secured debt like houses and cars, payday loans and other student loans are usually not covered by debt management plans.
When do you need a DEBT MANAGEMENT PROGRAM?
- You have multiple bills and cannot manage them efficiently.
- You’ve tried out self repayment plan but it has not helped you to overcome your debt problems.
- You’re in financial crisis and wish to get rid of your debts.
- You want to stop getting collection calls.
- You want to lower the interest rate on your bills.
How do you benefit from a Debt Management Program? ?
Every person's situation is different, but in many cases, debt management can help you:
- Lower interest rates. These new rates typically range between 0% to 9.9% interest
- Make one convenient payment per month
- Stop late fees and penalties
- Reage the accounts which means past due accounts are brought back to a current status
- Reduce or eliminate harassing creditor calls
- Every person's situation is different, but in many cases, debt management can help you:
What happens in a DEBT MANAGEMENT PROGRAM?
A debt management agency evaluates your current financial situation, taking into account the interest rates on your bills, total debt amount and the required minimum payment.
Once you enroll for debt management services, a debt management agency works on your behalf to negotiate with your creditors to lower the interest rates and monthly payments.
You’ll make a single monthly payment to the debt management agency. The agency then disburses the payment to your creditors. This goes on for approximately 3-4 years or until you have paid off your bills.
Does a debt management program affect your credit?
When you're in a debt management program, your credit report shows that you are making payments through a third party. FICO or Fair Isaac Corporation will not consider credit counseling or debt management programs while calculating your credit score. It is NOT part of scoring
Participation in Debt Management/Credit Counseling is NOT factored into your FICO® score
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- Lower your monthly debt payments
- Reduce interest on your debt
- Stop late fees and over the limit fees on your debt
- Get you out of debt fast
- Save you thousands of dollars
- Assist with creditor / debt calls
- Bring your debt accounts back to a current status
- Is not part of credit scoring. Click on the myfico seal above.
- Give you one easy monthly payment
- 24/7 online access to your Debt Free Options account (once it is set up)
Debt Management may help you:
Example of Possible Estimated Savings with Debt Relief Payment Plan
Beginning Balance |
Minimum Payment |
Total Payments Without Debt Relief Plan |
Total |
Savings With Debt Relief Plan |
$10,000.00 |
$220.00 |
$129,360.00 |
$18,920.00 |
$110,440.00 |
$20,000.00 |
$440.00 |
$264,440.00 |
$25,520.00 |
$226,600.00 |
$30,000.00 |
$660.00 |
$396,660.00 |
$38,280.00 |
$339,900.00 |
$50,000.00 |
$1,100.00 |
$661,100.00 |
$63,800.00 |
$566,500.00 |
$70,000.00 |
$1,540.00 |
$925,540.00 |
$89,320.00 |
$793,100.00 |
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