Your Debt Choices

Debt Management Services

A debt management plan helps eliminate credit card debt without taking out a loan. Debt management plans consolidate debt, may reduce interest rates and provide affordable monthly payments based on your budget.

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What Is a Debt Management Plan?

A debt management plan is a carefully constructed payment schedule that consolidates credit card debt payments into one affordable monthly payment. There is no loan involved, and credit scores are not a factor.

Consumers in a debt management program generally pay reduced interest rates on their credit card debt. After enrolling in a debt management program, creditors require you to close your cards, so as not to incur additional debt.

Features of a Debt Management Plan

  • Consumers make one consolidated monthly payment to a nonprofit credit counseling agency, which then pays off all creditors, in an agreed upon amount.
  • Creditor offer reduced interest rates on credit card debt to as low as 8% (sometimes your interest rate could be as low as zero).
  • Monthly payments are calculated at an affordable rate based on consumer’s budget and are agreed upon by the creditor.

Credit Card Debt Management: How to Enroll

What to expect in a credit counseling session:

  • Our certified credit counselors help you identify the root cause of your debt.
  • Our counselors help you create an affordable monthly household budget.
  • If a debt management program is the best option for you, you can sign up immediately.

The good about debt management.

Pro’s of Debt Management

  • Affordable payments: Credit counselors at InCharge review income and expenses to determine how much of your money is available to apply to credit card debt. Card companies reduce the interest on your credit card debt to a level that you can afford. In many cases, interest rates drop from the mid-to-high 20s down to single digits of around 8%.
  • Simple payment: A single payment goes from your bank account, which then distributes it to all creditors in an agreed upon amount. No need to try and keep up with payment dates and no more late fees tacked on to your balance.
  • Fixed timetable for eliminating debt: Debt management programs are set up to eliminate credit card debt in 3-5 years, or less.
  • Phone stops ringing: No more calls from your creditors.

The not so good aspects of debt management.

Con’s of Debt Management

  • Only applies to unsecured debt: You can’t include student loan, mortgage or auto debt.
  • Penalty for missing payment: If you miss a payment, your debt management program may be canceled.
  • Cards go away: One of the provisions of the program is that you stop using your credit cards.
  • Not every company will accept a proposal for reduced interest rates: The smaller banks and possibly some of the department store or gas station card companies don’t always accept debt management programs.
  • Takes too long: Some consumers want a quick solution, and this isn’t one. It’s set up for 3-5 years, so payments remain at an affordable level and you have a better chance to succeed.

Deciding factors in choosing debt management.

Is a Debt Management Plan for You?

Not all consumers are in debt for the same reason and that’s why there are multiple solutions for people trying to climb out of a financial hole.

The ideal candidate for a debt management plans is someone who has high-interest debt (i.e. credit cards) – and a steady enough income to handle that debt – but needs help creating a better budget to guide them down the right path.

Other factors to consider for debt management include:

  • Can I live without a credit card?
  • Will I be responsible in making a payment every month?
  • Will I be making an expensive purchase (home or car?) in the next year and need credit to get it?

There are alternative options to debt management.

Other Alternatives to Debt Management

Other Debt Relief Options Debt management plans might not be the right solution for your credit card problem, but there are other debt-relief options.

The alternative solutions could be:

  • Debt Consolidation Loan If you qualify – i.e. you have a very good credit score – you would receive a loan that could pay off your credit card debt at a lower interest rate and monthly payment than credit card debt. Unfortunately, you still owe the bank that gave you the consolidation loan so you’ve transferred the problem from one source to another.
  • Debt Settlement Debt settlement is when a creditor agrees to accept payment that is less than what is owed on your credit card debt. Sound too good to be true? It is! There are a lot of negatives that make this a risky alternative. Your credit score will plummet, and you will find it very difficult to get a loan in the future because you didn’t pay back this one. This is something that only should be considered if all other avenues are closed. You may be responsible for paying taxes on the amount forgiven.
  • Bankruptcy When the size of your debt overwhelms your income’s ability to pay, it may be time to consider a fresh start through bankruptcy. A successful bankruptcy filing will eliminate all credit card debt, but also leaves a 7-10 year negative mark on your credit report.
  • Do-It-Yourself Debt Management You can absolutely set up a debt management program on your own.
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