Debt Management
FAQ's About Debt Management Programs
A debt management program will help you get out of credit card debt by
lowering your monthly payments and your interest rates so you can pay off your
unsecured balances within a reasonable amount of time.
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What will a debt management program cost me?
Fees range from $400-$1,500, but depending on your program you might not have to
pay the fees out of your pocket. The fees may be added to your balance and
included on a credit card already closed and enrolled in the program.
Will this hurt my credit?
Debt management or credit counseling does not usually negatively impact your
credit score
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These programs will not generally affect your credit. You still are established
with your creditors and make one
payment per month that is distributed to all your creditors. Each month
you will receive statements from your
creditors reflecting payments made and showing your new balance.
Why do I need to give out account information?
Account numbers tell the debt management companies what type of card(s) you
have, who the creditors are and how low the interest rate can be lowered.
Why do I need to give out my checking or savings account?
Most non profit organizations in debt management or credit counseling DO NOT
have a billing department so you can not mail payments - they must be done
electronically.
Can I still use my cards while they are in the program?
The only thing creditors ask in exchange for lowering the rates is that you stop
using the card(s) until your balance(s) is/are paid off. You may
reactivate your accounts in the future. A debt management program is
designed to get you out of debt, not lower your interest rates so you can spend
more money.
What will my rates be?
Each creditor has their own rates ranging from 2.9%-9.9%. These are national
rates that all debt management and
credit counseling companies use.
Do I have to have the benefits package or educational materials?
Yes, because these programs are government regulated they must show you
financial reprieve in three areas. You can not get into a program without these
benefits and educational materials.
1. Financial reprieve on your interest rates (Lower interest
rates)
2. Financial reprieve on your monthly out of pocket expenses
(Shorten your amount of payments)
3. Financial reprieve on a daily basis (Program/educational
materials help you save hundreds of dollars per month)
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