A Debt Management Plan Could Be Your Salvation

Even though we should know the pitfalls of entering into debt (or a credit “relationship” as your bank likes to call it!), there are still countless people struggling to make their payments because of unforeseen circumstances or just poor planning.

If you are struggling, debt management can be the answer. The question is, do you want to go through a debt management company, or do it yourself?

If you go through a company, keep in mind that some of them exist for no other reason than to make money off of your misfortune. A legitimate debt management company will reduce your debt by negotiating with your creditors, and may even help you clean up your credit report as an added bonus to the debt repayment deal.

On the other hand, you can do that yourself — especially if you are very delinquent in your payments. Most companies will opt to get some of their money rather than risk getting nothing at all if you are forced into bankruptcy.

Some of the dangers you need to be aware of if you decide to have someone else manage your debt are:

  • This creates a “clean slate” and lower monthly payments which many people see as an invitation go take out more credit. This can actually mean that you will be further in debt than when you started!
  • As I said before, some of these companies are just slimy! If you sign up with the wrong company, your payments (which are sent to the debt management company for disbursement to your creditors) may never make it to where they are supposed to go; or the debt management company may keep a large percentage as their fee.
  • Using a debt management company will still be reflected on your credit report, and any “forgiven debt” will still result in a 1099 which you will have to pay taxes on as additional income.

Think before choosing your debt management partner. The right one can be your pathway to financial security – the wrong one could leave you even worse off.

In the final analysis, you really don’t need someone else to do for you what you can do for yourself.  I contacted my creditors on my own, negotiated debt settlements, stopped interest charges, and paid off my debt. If I could do it, so can you. You’ll find more tips on negotiating with creditors on this website, as well as my 21-day course that will teach you how to get out of debt and get on the path to financial freedom.


Leave a Reply

Your email address will not be published. Required fields are marked *

CommentLuv badge