Debt management services..?Need advice

[daniel999]

Hi everyone,
Are debt management services safe to use?help me out on this..?

[BobHearny]

The answer is solely dependent on the company providing the debt management service. That being said, what is it you find enticing about using a third-party debt management service?

The reality regarding debt management services is they aren't really providing you a service you can't organize on your own. Most all the major credit card companies provide a hardship program of some sort - the ones that don't, typically won't accept a DMP agreement anyway. Also, do you understand the fees associated with the debt management program??

You also need to understand what concessions the creditors are making if you do enter a DMP. If they aren't significantly reducing your interest rates, forgiving penalties and fees, you may find yourself in program that isn't really intending for you to succeed in paying off the debt - rather simply a program that is creditor-friendly in milking as must additional money from you before you just completely default. Use a credit calculator to truly see if the monthly payment you're making is enough to pay down the principle or is it barely enough to cover interest - the answer to that question to shine a light on the intention of your creditor and credit counselor.

Here's a better idea. Create an accurate household budget with a minimum 10% monthly income savings contribution. Be sure your adding your house payment/rent, car payment, and any educational loans to this budget while NOT adding your credit card and other unsecured credit payments. Now, the remaining amount of money is what you have available to pay towards your creditors...

Now, go open a checking account in a different bank, funding it each month with the amount of money you have set aside for paying your creditors. The reason you're doing this is for several reasons.

1) You're going to give your creditors access to this account and they are going to debit it monthly - in case they debit too much you don't want to put your other household expenses at risk of not getting paid, so diversifying where your money is held is just good policy.

2) It'll feel like a DMP in the sense you're only making one payment (to your bank account) and since you're creditors are automatically debiting the account you'll always have a current and honest accounting of your money.

Once you've establish the amount you have available and the separate checking account, contact your credit card companies and inquire about any financial hardship programs. Some things to keep in mind about a financial hardship program or entering into a DMP. Chances are high they will temporarily freeze (or close) your revolving credit line. Obviously, if you can't pay your present balance they don't want you to continue racking up additional charges.

Most hardship programs are TEMPORARY, so be sure you remember the end date because the creditor won't remind you. They want you to drop out - they do not want you to succeed in the program (and this is also true for DMP). However, as long as you follow the program, stay on top of your creditors, ensure your account is automatically debited (if they miss a payment, contact them immediately to see what happen), you'll usually get a significant interest rate reduction, fee/penalty waivers, and a program that allows you to pay your debt off far faster and with more control and security than a DMP through a credit counselor can provide.

Hope this info helps and sorry for being long-winded...
~Bob Hearny

[peter2010]

Yes, they are a safe option. But only as long as you opt for a good debt management company. So always go in for reputed debt services such as , or . Also take a look at this article about

[Nicholas_B]

Hi yes they definately are safe and can really help you out with your debt situation by giving you help and advice by specialised advisors giving you the correct help and advice for your situation and not just generic information on generic debt problems.. Search for debt companies online that you feel comfortable with..