Debt Management Plans For Troubled Consumers–Aid To Help Avoid Personal Debt Delinquency

Debt management plans have been one way that troubled consumers have been able to avoid delinquency on their personal debts and, essentially, find assistance when it comes to debt relief solutions that may be necessary for these men and women to avoid missed payments or outright defaulting on debt obligations. While there have been consumers who are struggling in their personal finances in recent months and have turned to credit counseling or debt management plans for help, there are a great deal of differences in programs available to assist consumers when it comes to avoiding delinquency, and as a result, these options must be explored by individuals before a decision is made.

One consumer’s personal debt situation will differ from another, and a debt management plan may be more beneficial for some but could be detrimental to another consumer, especially when a variety of factors are considered. As an example, simple credit counseling can help consumers avoid debt management or a debt settlement plan by helping them formulate a monthly budget that will allow them to get out of debt with their personal income, but again, there are situations where this is not possible due to either financial distress or poor money management habits.

However, there are mixed opinions on debt management programs, and there are some advisers who feel that management plans can be helpful, while others believe they should be avoided. Essentially, a debt management plan helps a consumer by working out an agreement between creditors and consumers, typically through a credit counselor or debt management agency’s program. Once this agreement has been reached, a consumer will make payments to their debt management agency who will, in-turn, make agreed-upon payments each month to various creditors at a reduced payment obligation.

Understandably, this is one of the main draws for consumers as they will be able to get out of debt without having to turn to settlement agreements, which will do a great deal of damage to their credit score since they will be paying off debt for less than they originally owed. A debt management plan simply lowers the monthly obligations that a consumer must meet, but typically, these individuals will have to pay their creditors in-full over a longer period of time.

There are some debt management plans, however, that will not allow consumers to apply for new credit, and there are problems which may arise if a debt management company makes a late payment. While, again, there are some advisers who feel that debt management should be avoided because it can do damage to a consumer’s credit score, typically, these arguments have arisen due to fraudulent counseling organizations which may, again, not make payments on time or hold payments beyond a grace period which a creditor may have set.

Obviously, if a debt management plan requires that consumers cancel lines of credit, this could also drop one’s credit score, however, there are those who feel that finding a reputable credit counseling or debt management agency can be helpful for individuals who fear they may become delinquent on their personal debts. A great deal of research needs to be conducted when seeking one of these debt management plans or a credit counselor, and credible organizations will be upfront about pricing structures, fees, and will allow a consumer to track how their money is being distributed to their creditors.  Finding the best accredited organization is necessary so that issues of abuse, late payments, or damage to one’s credit score can be more easily avoided.