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How to Choose a Debt Management Program

Couple choosing debt management plan

When you are struggling with debt, it can seem as though there are a lot of options for getting out of it. The number of choices available can make picking a program that’s legitimate and that will actually help you seem like a challenge. Part of knowing how to choose a debt management program means knowing what to look for and how debt management is different from other options.

Understanding Debt Management

Step one of how to choose a debt management program is knowing what debt management is. It’s not the same thing as a debt consolidation loan, which is the process of taking out one big loan, usually with a lower interest rate, to pay off other debts. Nor is it the same as debt settlement, which is the process of negotiating a lower principal amount with your creditors. Instead, when you enroll in a debt management program, you are asking a nonprofit credit counseling agency to work with your creditors, potentially getting you a lower interest rate and fewer fees. You make a single payment to the agency each month, and your counselor divvies it up among your creditors, as agreed.

Look at Reputation

When picking a debt management program, you want to choose a company with a stellar reputation. The best companies are accredited by organizations such as the Better Business Bureau or the Financial Counseling Association of America. The counselors working with the organization should be certified and accredited, as well.

Accreditation is just one thing to look for. It also helps to find out what past clients have to say about the organization. Many of the top programs have testimonials from happy clients available for you to read. You can also do research online to find reviews or ask people you know if they have any recommendations.

Look at the Fees

A debt management program is usually not free, although nonprofit organizations will typically offer hardship programs for clients who can’t afford the fees. Before you sign on for a program, make sure you know what you need to pay for it and how often you need to pay it. Many programs roll the fees into the monthly payment you make. If that is the case, find out what part of your monthly payment is going to the management program and what part is going towards paying down your debt. No matter what, make sure you get a price quote in writing before you decide to work with the plan.

Examine the Process

It helps to understand what you can expect from a debt management plan before you sign up. First, you want to look for a program that offers nonprofit credit counseling before it signs you up for a plan. Not everyone needs a debt management plan, and working with a counselor first will give you an idea of whether it’s the right choice for you.

Also, find out how long the plan takes. It might take between three and five years before your debt is paid off, for example. You also want to find out if the counselor will continue to provide assistance and guidance to you when you’re on the plan. Many programs include budget help and counseling throughout.

CESI has helped hundreds of thousands of people get out of debt. To learn about our programs and services, contact us today.


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