Consumers may have option for debt relief from various credit counseling agencies in a variety of capacities as these forms of debt assistance can help consumers formulate a budget where they may find affordability concerning their debts and personal financial life, or even the ability to set future financial goals, but also, there are credit counseling companies that are charged with implementing debt management programs that will lower a consumer’s repayment obligation to their various creditors. While the practice of debt management programs that provide debt relief is one that consumers must scrutinize before entering into any agreement, they have been one way that many troubled individuals have avoided missed payments and further problems in their financial life and concerning their credit score.
While there are various hardships which consumers may face that have led them to seek out assistance, debt management plans are usually one step after a consumer may have either attempted to implement budgetary practices of their own accord or have sought out credit counseling assistance in the hopes that an outside agent could look at their financial position and implement a repayment plan within their financial means. According to an article on Bankrate.com,there are some consumers who may be able to request a hardship program from either their creditors or through a credit counseling agency and, “A hardship program may include solutions such as an interest rate reduction, possibly some principal forgiveness and an affordable payment.”
Yet, when it comes to acquiring a debt management program, consumers must understand that there are methods that are best followed in order to ensure that an individual struggling with their personal finances and in need of some form of intervention will be able to gain the most from this particular form of assistance. First and foremost, consumers who are researching a credit counseling agency must make certain to find a reputable and accredited organization as many financial distress problems that arise from this sort of debt relief assistance are usually due to a poor counseling organization managing a consumer’s finances.
Also, a consumer who seeks out help before they begin missing payments and, when making payments to a credit counseling agency for the purposes of a debt management program also must make sure that they are given a detailed breakdown of where their money is going, as well as, check to make sure that creditors are receiving these payments on time. Most debt management plans will usually require that a consumer make a payment to their credit counselor, which is one of the many reasons that a consumer must work with a reputable organization, and then these credit counselors will pay out various funds to creditors, which will be outlined in a debt management agreement.
When these aspects of a debt management program are carefully tracked, many consumers may see a minimum decrease in their credit score rather than a substantial setback, and there are also some officials who feel that lenders who may see a debt management program note on a consumer’s credit history could view this in a positive light, since a consumer is trying to settle their debt for what they originally owed despite having financial problems. While debt management is helpful, it is not best for every consumer and there may be methods of budgeting and repayment that can be used so that individuals can avoid this particular form of debt assistance. Yet, consumers looking at a debt management plan need to understand that settling debts, which is an agreement to pay less than originally owed, is not the same as a management program and can do further damage to a consumer’s credit history and score as a result.
However, consumers who take the time to address their financial issues early and seek out a reputable credit counseling organization, when this form of aid is needed, may find that problems related to a decrease in credit score are, again, nonexistent or minimal at best and as a result of proper research and debt management implementation, these consumers could find themselves on a path to being free and clear of their debt.