Debt management is a concept, which deals with helping debtors tackle their debt problems. Credit counseling is considered as the first stage of debt management. The article below elaborates on debt management services.
The main aim of debt management is to make sure that people under the burden of heavy debts, who are finding it difficult to repay the ever mounting debts, due to reasons, such as insufficient domain expertise or defects in their credit management, get a well-planned and easy repayment schedule. The credit or debt counselors, who have recognized certifications, decide effective plans and strategies to clear the debts. Given below is the detail explanation of the process of debt management, which is carried out by the agency.
The Process of Debt Management
The two vital steps involved in the services are credit counseling and getting a proper program. Let us discuss these two steps one after the other to understand them better.
- The first step taken by the team is credit counseling, which is imperative if you want to file for bankruptcy.
- As a rule, you will have to approach the agency at least one hundred and eighty days before the day you actually file for the bankruptcy.
- At times, though, when there are situations due to which you cannot file within the stipulated period, you are exempted from credit counseling sessions with the debt managers.
- The suggestions about debt settlement given during the credit counseling sessions will help those who are planning to file for bankruptcy.
- The bankruptcy court should be given all the details of the debt repayment suggestions given in the credit counseling.
- Debt management services offer guidance on how to increase your savings for your own benefit, planning, and maintaining your daily household budget and other expenses, and on finding ways for debt repayment.
Getting a Program
- The process of debt management cannot be complete unless a program is sanctioned as per the guidance and rules laid down during the credit counseling sessions.
- The Equated Monthly Installments (EMI’s) are generally reduced to lessen the monthly payment obligations or burdens on the people who are finding it difficult to repay huge debts.
- There is another procedure about debts, which may be implemented and that is the re-aging of the account as a current account.
- This procedure does not cut the amount of debt to be paid by the person.
- The re-aging can be done if the people, whose debt is to be managed, pay the EMI’s of three months, either one after the another or in a lump sum way.
- However, due to this solution, you will not be eligible for getting new line of credit or loans.
- The summary of this entire process is that a new line of credit, which can also be called debt consolidation of loan, is made available to the debt-ridden people.
- Debt management by these services providers help to cut burden on people by forgiving the late fee charges and other fees.
- The debt management service providers concentrate equally on re-aging and debt consolidation.
- The re-aging, slowly and surely helps you in improving your credit scores.
- The debt management facilities are available for people if they default on the payments of the monthly installments, for which is more than five months.
- The credit rating received after consolidation of loan is R7 OR 17, which is better than that offered for the bad debts.
Debt Management Service Providers
- The National Foundation for Credit Counseling (NFCC) and members of the NFCC such as Consumer Credit Counseling Services (CCCS), will help you solve your debt-related issues.
- Debt settlement programs for help of common public are provided by the American Debt Enders.
- This company will negotiate the interest rates on your behalf and will protect you financially in all possible ways.
- There are some non-profit service providers as well as online facilities, which you could search surfing the internet.
You will be able to clear your debts early with the assistance provided by the debt management companies. Thus, in this uncertain financial world, debt management is a big boon.