Debt Relief Services – Are Debt Management Programs Provided By Credit Counseling Agencies?

Debt Relief Services Are Debt Management Programs Provided By Credit Counseling Agencies

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No one deliberately tries to get into debt. However, sometimes the situation is such that getting into debt is unavoidable. In such situations debt management programs come in handy. They can provide you assistance till you become debt free. Counsellors who are certified and trained in consumer credit, debt management and money are employed by the reputable credit counselling organisations. There are several non-profit making organisations which provide credit education and counselling to their customers for free.

However, there are some organisations which misrepresent information to trap customers. These organisations charge heavy fees from their clients or urge them to make voluntary contributions to the company which can worsen the customers debt condition. If a company representative claims that debt management plan is the only option for your debt condition without actually reviewing your financial statements and without offering any consumer education or counselling is trying to trap you. Such companies misrepresent their non- profit status and misrepresent their business practices to the regulators. A consumer should avoid such companies at all cost.

The credit counselling agencies offer debt management plans to their customers which has a three fold benefit.

The first and most common benefit is that this plan helps you merge several monthly payments into one monthly payment. This new monthly payment is usually lower than the total sum of the individual payments which was being made by the customer earlier. Most credit card companies agree to a lower monthly payment if the customer has enrolled for a Debt management plan rather than if he approaches directly.

The second benefit that a customer can count upon is the lowering of the interest rates. When a customer has been defaulting on his account then it is often seen that the interest rates being charged are as high as 30%. When they enrol for a DMP, this interest rate is usually slashed by 5 % to 10%. There are some companies which eliminate the interest completely. This reduction helps you in paying off your debt in 3 to 6 years time as against 20 or more years.

The last benefit that you will get is that the agencies help in bringing the delinquent accounts current. After the customer has made a number of on time payments through Debt management plan, they help in reaging or curing the account.

Non profit credit counselling agencies help their customers to bring back their financial life in shape.

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