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Debt Consolidation/Debt Management plans to get Debt Relief

Debt Consolidation or “Debt Management” plans can help consumers get credit card debt relief and other types of unsecured debt relief such as lines of credit, bad credit consolidation loans and medical bills paid off much faster than making minimum payments. When you consolidate credit cards and other debts thru one of these plans your interest rate should drop and your over all payment may be lower. By getting credit help collection calls, late fees, and over-limit fees should stop once enrolled.

It’s important to know that these plans are “Creditor” based plans, which means they are offered by your credit consolidation grantor and available only thru approved non-profit agencies. All benefits of the debt consolidation or “debt management” plan will be directly from the original credit grantor or current creditor. The benefits extended vary from creditor to creditor, however most, (but not all) are fairly similar. You can expect typical department store credit card interest rates (18-28%), to be lowered to 6-9%. Some banks and finance companies will eliminate the interest completely; however expect an average interest rate of 6-9% when you consolidate credit cards debt relief and other unsecured debt consolidation loans and bad credit thru one of these plans.

One thing you need to prepare for is that you won’t be able to make further charges on any account being included in a debt management plan. If you have a credit card that has a low balance and reasonable interest rate, you should strongly consider keeping that card out of the program which is usually not a problem, although some creditors have stricter rules than others and depending on who your creditors are they may require all accounts be included.

There are other ways to pay down debt and bill consolidation. Just making larger payments each month will of course pay your accounts off faster than just making minimum payments. If you have the ability to make larger payments, that option should be considered. One thing you should not do is take equity out of your home to pay off credit card consolidation and unsecured debt. According to US News & World Report it puts your home at risk.

It’s not just US News saying that. Most financial experts will tell you not to use home equity to pay-off credit card debt.

The first thing to do when you have financial trouble is a budget. Know exactly where you are. Don’t be afraid to look at the numbers, it’s not going to help to stay in the dark. You don’t need anything but a pen and paper (or use your computer) write down monthly expenses on one side, income on the other and subtract expenses from income. That’s what you got left over. If your in the red, it’s time to reduce spending or increase income or a combination of the two.