Can You Manage Your Debt With Debt Management?
There are many ways to rid yourself of debt, but not all of them offer the best solutions for your financial future. These methods that allow you to handle your debt vary in terms of performance, personal cost and financial impact. Debt management offers the ability to have your debt handled in a structured manner through a third party, but is it the right option for you?
What Is Debt Management?
Debt management works as a method to bring your credit accounts current while avoiding negative impacts to your credit score by making regular, on time payments to any accounts included in the program. Most people end up paying their debt off over the course of about five years. Debt management is meant to focus on paying off debts of the commonly unsecured type, i.e. credit cards and certain loans. There are certain rare instances when other expenses can be added into a debt management plan, such as car payments and some utilities. The attempted goal is to streamline your payments for multiple debts into one or two monthly charges while allowing you to focus on the more immediate expenses in your life.
Is My Credit Really Unaffected?
Most debt management providers will suggest that other debt resolution programs will take methods to resolve debt at the expense of your credit score. What most people don’t know about their credit scores is that there are many factors that impact their standing. One of the hardest to rectify is the amount of time you hold an open credit account. When creditors look at your report they judge your credit worthiness by how long you’ve held an open credit account. Most accounts you hold at an early age close in your lifetime, i.e. loans, but the ones we tend to keep open are credit cards. Debt management programs require you to close your credit cards, rarely allow one credit card to stay open for emergency purposes. This effectively eliminates your open lines of credit, forcing you to start over if and when you finish your debt management program.
Are There Other Negatives?
Unlike with a debt settlement plan, debt management has you pay all of your principle debt while occasionally removing fees and lowering interest. One of the things that people want as an immediate result of a debt management program is the stoppage of collection calls or threatening letters. While some forms of contact cease after some time it’s not guaranteed. Another factor to keep in mind is that creditors don’t necessarily have to lower their interest rates at the request of a debt management provider. This means that while you can pay smaller overall payments on a monthly basis, you may end up not reaping any benefits in the form of a smaller payment.
What Is The Alternative?
While debt management seems like a great idea, there are many underlying factors that can result in more harm being done to your financial situation that’s much harder to repair. Those looking for a simpler solution that can actually shorten the amount of debt to be paid back might want to explore debt relief through debt settlement with Guardian Debt Relief. Where debt management has people close out accounts that they will have to build up later on, debt settlement requires no such action. Debt settlement through Guardian Debt Relief costs nothing to start and works to reduce the overall amount of debt people have. Money paid towards debt settlement is placed in an escrow account and then paid out to creditors. Consider reaching out to a debt settlement professional to take the first step. Contact Guardian Debt Relief today!