Debt Management Programs

Debt management programs can save the day if you're in debt. Learn more about debt management programs here.

Debt Management Programs

Everyone who is in debt has different situations surrounding their debt, as well as different resources. This means there are different ways of dealing with it.

Debt Management Solutions

Choosing the right debt management program is no small task, especially if you aren't familiar with the debt management solutions that are out there today. To give you an idea and get you started, we've outlined five debt management programs below.

• Debt Consolidation - Under this program, a debt management professional contacts your creditors and gets your balances reduced by getting interest rates lowered and past fees removed. Then they bundle all the new balances up and you make one payment to the debt management company each month that's distributed to your creditors. As a result, you're out of debt in five years.
• Debt Consolidation Loans - Under this program, a debt management company company writes you a check to cover the amount of your outstanding debts. Then you pay the debts off, and make one monthly payment to the debt management company. This plan also gets you out of debt in about five years. However, you don't get reductions in balance and you must have collateral.
• Debt Settlement - This plan sounds good on the surface because it can get your debt knocked down by 60-80%. However, your creditors will expect you to pay the remaining balance all at once and immediately. Sometimes, you can pay it back in 1-3 years through a debt settlement company. Debt settlement does do some damage to your credit, making it a less attractive option.
• Student Loan Debt Consolidation - This is only for people with student loans. It combines your student loans into one, gives you one low interest rate and cuts your payments in half by stretching them out over a long period of time.
• Debt Consolidation Mortgage - Finally, your best option! But it's only for homeowners. You get the money you need to pay off your debt from your mortgage, then you pay off your creditors. You get a new mortgage with the amount you borrowed added back in, and your house payment goes up slightly ($25-$35 a month, approximately). The bonus is that you get the same low interest rate as your mortgage. And since you get to write some of your mortgage interest off on your taxes, it makes it the best of all debt management programs.

Think one of these debt management programs is right for you? The only way to know for sure is to contact a debt management service.