| When some people become overwhelmed with | | | | Because many people find it hard to |
| debt and find it hard to pay their | | | | adapt to a debt management service, |
| bills, they often turn to a debt | | | | emergencies may come up where money is |
| management service. These services can | | | | needed. It is important to find out what |
| often be found through credit | | | | will happen if you miss payments before |
| counselors, and you should only use a | | | | you commit to using the service. Each |
| service that you're comfortable with. | | | | company is different, and some companies |
| This service should be more concerned | | | | may have large penalty fees for |
| with helping you than with making a | | | | customers who don't make their payments |
| profit. | | | | on time. With the rise of debt |
| What Do Debt Management Services Do? | | | | management services, people have often |
| The debt management service transfers | | | | been advised to look for institutions |
| payments from their clients to the | | | | that are non-profit. The idea was that |
| creditors. In return, they may take out | | | | organizations for profit would focus |
| a commission from the transfer or will | | | | more on profits than with helping |
| receive fees from the lenders. While | | | | clients manage their debts. |
| debt management services may work with a | | | | Profit or Non Profit? |
| wide variety of different loans, they | | | | Despite this, many debt management |
| usually focus on debt that is unsecured. | | | | services that are for profit will |
| They are different from credit | | | | advertise themselves as being |
| counseling services. Those with auto | | | | non-profit. Using a non-profit |
| loans or mortgages are usually not | | | | organization doesn't guarantee you will |
| referred to debt management companies. | | | | get better service than you would from a |
| Consolidation of Your Debts | | | | for profit organization. It is best to |
| Many debt management services offer debt | | | | use services that are accredited with |
| consolidation loans. All of your bills | | | | the National Foundation for Credit |
| and outstanding debts are combined into | | | | Counseling. Accredited services are not |
| one bill. Once this has been done, it is | | | | likely to charge outrageous fees or |
| up to the debtor to make the monthly | | | | attempt to take advantage of their |
| payments on the loan. If the debt | | | | clients. Before you look at a debt |
| management service reduces the interest | | | | management service, you should call your |
| or balances on your loans, this can | | | | creditors to see if they can lower your |
| effect your credit. Many lenders will | | | | interest rate. |
| view you as being a high risk client | | | | Getting a Cheaper Rate |
| when looking at extending future credit. | | | | Many credit card companies will lower |
| Despite this, the effect on your credit | | | | your interest if you call them and |
| is less than things such as continuous | | | | inquire about it. It may also be |
| late payments. A debt management service | | | | possible to use a standard lender as |
| is also an excellent alternative to | | | | opposed to a debt management service. |
| filing for bankruptcy. | | | | Under some circumstances it may be |
| What's In It For Them? | | | | necessary to file for bankruptcy. You |
| It is common for debt management | | | | could also get an unsecured loan to pay |
| companies to earn up to 10% of the money | | | | off all your debts if your credit is |
| transferred from their clients to the | | | | good. |
| creditors. This along with the fees paid | | | | You should also be wary of debt |
| to the debt management companies from | | | | management services which are late |
| the creditor can lead to very large | | | | making your payments. If this occurs you |
| profits. As can be expected, some | | | | should immediately call them and get an |
| companies will try to abuse their power | | | | explanation. Your credit can be damaged |
| by persuading clients to sign up for a | | | | if they make your payments late, and if |
| service which is driven by profits | | | | they are charging you high fees you |
| instead of helping them manage their | | | | should cancel their service and look at |
| debts. | | | | other options. |
| Save Some Pennies For Those Rainy Days | | | | |