A Debt Management Program is also known as debt repayment plan. It is a creditor-approved arrangement that allows the people in debt to repay their unsecured debts at reduced interest rates. The credit counseling agencies will assist their clients to negotiate with the creditors to reduce interest rates and monthly repayment amount as well as eliminate late fees or penalties. Before you enroll into this program, there are some essential facts that you must bear in mind.
This particular program only includes unsecured debts like medical bills, credit card bills and student loans. The duration of completing a debt management program is about 3-4 years. When someone is in this program, his or her credit report shows that monthly payment is made through a debt management company or a credit counseling agency. However, Fair Isaac Corporation (FICO) will not consider this during the calculation of the credit score. It is necessary for you to be aware that if the payments to your plan and your creditors are not made on time, there is a high possibility for you to lose the benefits of lower interest rates and fee waivers. Besides, you will also lose the progress you have made on paying off your debt. If you fall behind on the payment, you may not be able to have your accounts to be re-aged.
In short, this program is designed to help people who are in debt to recover from their financial problems and get on with their life. All they need to do is to stick to a tight budget and keep making regular payments until they are debt free.
For more information about debt management services and debt prevention and management, visit DebtManagementEssentials.com.
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