| Wise
debt management and debt help from a debt consolidation company can
keep you out of bankruptcy.
Wise debt management is essential. If you are already in a lot
of debt then good debt management is even more important. You can
learn good debt management skills when you get debt help from a
debt consolidation company. A credit counselor can teach you the
basics of debt management and how to stay ahead of the game.
Debt Management From The Beginning
Lets begin at the beginning. What is "Debt Management"?
This name has become an umbrella for a large group of debt-environment
functions and activities: debt reduction, consolidation, negotiation,
settlement, bankruptcy, credit repair clinics, and even deciphering
credit reports. Since a couple of these will not be discussed at
length in this article, here are a few brief notes which should
not be overlooked.
Credit Repair Clinics - Nolo
Press and other notable consumer groups for debt management issues
strongly suggest avoiding credit repair clinics. Many of these clinics
are illegal. Some have been caught stealing the credit files of
folks under the age of 18, have died, or live in far away areas.
Others break into credit bureaus and change files, and still others
suggest you start a new IRS Employer Identification Number (EIN)
which besides illegal, blocks earning any Social Security benefits.
But the real bottom line even for the legal operations is, that
none of them can do anything for you that you can't do for yourself...
except charge you $250 to $5000 for unnecessary services.
Deciphering Credit Reports -
Credit reports can be intimidating but if taken slowly with the
use of materials sent with your credit report, you will get through
it. If you are going to try to correct your own credit report as
strongly suggested you should do, you are going to have to understand
it. To understand it, you are going to have to roll your sleeves
up and get intimate with it. There are additional support materials
for you to use in this site's "Credit Workshop" as well
as at the online sites of the credit reporting agencies.
Debt Reduction - Since my site
probably falls more within this category, probably little has to
be said except that any site which fosters debt reduction and/or
wise credit use ideas has my vote. Such sites are not my competitors...
they're my allies.
Debt Settlement and Negotiating With
Creditors Yourself - Though this article does touch upon
such topics by professionals, self involvement may be the best thing
for you. However, because of the length of the current discussions,
the debt settlement and/or negotiating on your own cannot be covered
until the next article.
The Difference Between Debt Management
And Bankruptcy
The differences between the two:
- On a debt management plan, you repay creditors 100% of what
is owed with the exception of interest concessions the companies
may or may not make. Under bankruptcy (Chapter 13) you pay so
many cents on the dollar. Under Chapter 7 your debts are forgiven
(with some exceptions).
- On a debt management plan, you do not lose any assets. Under
bankruptcy you may.
- On a debt management plan, many creditors will consider granting
a person credit once they graduate from the program. With bankruptcy,
you may be able to get credit but it may be much more difficult
and you could pay much higher interest rates.
- On a debt management plan, creditors may report your accounts
as "slow pay" or "not paying as agreed". Some
creditors will actually bring the accounts current and a person's
credit looks better than it did before. The information reported
by creditors stays on your credit report for 7 years. With bankruptcy,
it shows as a bankruptcy and stays on your report for 10 years.
- A debt management plan cannot stop legal action by a creditor.
Payment arrangements can be made, however, in many cases. Bankruptcy
does stop legal action.
- There are things a debt management plan can help people with
that bankruptcy will not (i.e. loans from family members and more).
- · Debt management plans are designed to be an "alternative
to bankruptcy" for those who have some ability to pay. Bankruptcy
was not designed to be an "alternative to repayment."
Related Articles
Debt Consolidation Company
Bankruptcy
|
