Will Debt Management Help You?
Many residents of Nevada and all across the country are experiencing a severe debt crisis due to a variety of reasons, including unemployment or large medical bills. If you are also finding it very difficult to pay off high-interest credit cards – or simply to make the minimum monthly payments – you may be interested in exploring how much you could potentially save by consolidating your high interest unsecured debts via a debt management plan or what's also known as debt consolidation. A debt management plan (DMP) typically involves combining high-interest debts – such as credit cards as well as other types of unsecured debts like medical bills, utilities, doctor bills, personal signature loans, etc. – into a single, more structured, and more manageable payment plan made to a credit counseling agency. With a more predictable and more affordable repayment plan – and, hopefully, lower interest rates – the objective is to provide a way for consumers in debt to direct more of their payment to pay down the principal of the debts versus simply "treading water" by only taking care of the interest each month. This can help reduce the principal amount of debt much faster than if consumers continue to pay higher interest rates month after month.
Debt consolidation, however, is certainly not the only available option for consumers in need of debt relief. For individuals and families with higher balances on their credit cards (generally $20,000 or more), debt settlement may be a viable option because it may facilitate a "negotiated settlement" between debtors and credit card companies for substantially less than is actually owed. Because of their potential to save money and resolve debts, depending on a consumer's debt level, both debt management and debt settlement are increasingly becoming popular debt relief options among consumers in financial distress who want to avoid bankruptcy, which has a more damaging and longer lasting impact to one's credit score.
To find out if you qualify for debt relief and see how much you can save, answer a few, simple questions online. It only takes minutes to complete and you will get a free debt relief analysis and savings quote. Begin now.
Credit Counselors Customize Debt Management Plans
When you enroll in a debt consolidation or management program, credit counselors will analyze your financial situation to learn how much actual unsecured debt you have. Then, they will work with you to determine how much money you can realistically allocate in your budget each month to pay off your debts. With this information in hand, they will create a debt management plan (DMP) and submit proposals to your creditors explaining your financial hardship and requesting the benefits of debt relief. Benefits typically include:
- Lowered monthly payments
- Reduced interest rates
- Waiving of late fees and penalties
- Consolidating or combining debts into a single, more manageable, monthly payment
- Helping individuals save substantial money and allowing you to get out of debt in less time than you could on your own if you didn't have the benefits of lower interest rates and continued to pay only monthly minimums at a higher interest rate.
Creditors who accept the proposals are added to the debt management plan. You, in turn, will be provided with a more structured and more manageable plan that allows you to pay your debts at a pace that you can more easily afford. For those creditors who do not agree to extend the benefits of debt relief, consumers or debtors are still obligated according to the original terms of their cardholder agreements.
Get Help from the State
While debt relief programs help many Americans during financially trying times, some people - including the elderly and those with medical needs - may have more immediate needs and require food assistance, child care help, or even help paying for utilities. To assist with their needs, the state offers such programs like Nevada Check Up (SCHIP), Nevada Energy Assistance Program, and the Head Start program, among others. To find out more about these services designed for low-income families and individuals, go to the state's homepage Benefits section.
Alternative Debt Relief Options are Available
An alternative to debt management through credit counseling is debt settlement. Debt settlement or debt negotiation is more commonly utilized by individuals and families who have high interest, high-balance credit card debt and seriously considering bankruptcy. It is a more aggressive form of debt relief that has helped consumers get out of credit card debt faster, assuming the consumer can accumulate money in a "set aside" account which can later be used to extend a settlement offer to creditors. It's important to understand the difference between debt settlement and debt management:
With debt management you are essentially paying off everything you owe, but saving money through much lower interest rates and a waiving of late fees and penalties. The goal of debt settlement is to "settle" with credit card companies for substantially less than you currently owe.
Why would credit card companies consider "settling" with consumers? If credit card companies decide eventually to "sell off" accounts that are 60 to 90 days late, or more to a collection agency, creditors may get as little as 10 cents on the dollar. It is not surprising then that credit card companies may be willing to accept a reasonable settlement offer made by you or by a debt settlement company negotiating on your behalf. It is important to recognize that when consumers default on their credit card agreements in order to set aside money in a settlement fund, creditors may threaten or take legal action. In addition, money saved through credit card settlements are subject to federal taxation. Finally, debt settlement typically will have a negative impact on personal credit, but not as serious or long lasting of an impact as personal bankruptcy.
To compare your debt relief options and see how much you could save, take a moment to answer a few basic questions so that we can connect you to a BBB-accredited debt relief provider who may assist you. Prior to enrolling in any debt relief program, it is important to understand clearly how much debt relief can potentially save, how long it will take to realize those savings, and the impact that any debt relief program could have on personal credit and taxes.
The bottom line is, if you are struggling with debts, or find it hard to make even monthly minimums, a debt relief plan may be able to help. Based on information that you can get from your free debt relief analysis and savings estimate, you can explore your options, see how much you can save, and find out how long it should realistically take for you to pay off your debts. Answer a few, simple questions online to begin.