Climbing Out of the Money Pit

Debt consolidation management

Debt is a big problem these days for many individuals and families, sometimes spiraling out of control. The economy being what it is, it has become increasingly difficult for many people to keep up with their bills, especially when those bills include loans and credit cards. There is a vicious cycle that so many are caught up in, borrowing from Peter to pay Paul, so to speak, and the debt is never decreased, it simply gets shifted from one place to another. With interest consistently adding to those bills, Americans on average are paying out approximately $6,658 every year in interest alone.

Millions of people have concluded that their debt is, indeed, out of control, and have turned to professional debt management companies for help. A good debt management firm is there to do just that; to provide help paying off your debt. A debt management firm will provide credit counseling and will help work out a viable plan that allows you to take charge of your debt, instead of continuing to let your debt have charge over you. The plan will put into place a schedule that will include affordable payments to creditors made in a timely fashion, and, before long you will see that this schedule is, indeed, providing you with help paying off your debt.

Although the average household income has increased by 26% over the last 12 years, the cost of living has increased as well, by 29%. This fact actually negates any increased income earned, and, not only enables debt to keep its hold on individuals and families, but also imposes additional hardship. Approximately 26% of people in the U.S. report an inability to pay their bills on time.

A debt management company professional will sit with you, as their client, and take a good, hard look at your finances. They will calculate your income versus your monthly bills, and will look at your debt to income ratio. According to your financial information, they will devise a manageable plan to provide you with help paying off your debt. A debt management company will work with your creditors to arrange a payment schedule that is suitable for you and acceptable to the creditor. Debt counselors can, and will, negotiate with creditors on your behalf and, in some cases, can bring them to agree to waive any fees that you have incurred with them over time. Some of these fees could be penalties on interest rates and penalties that were added on to late payments. Your debt management counselor can arrange for your monthly payments to be lowered sometimes by as much as 50%.

As you enroll in a debt management plan to help paying off your bills, often you will make just one monthly payment right into your debt management program. The company you work with will disperse the funds among your creditors according to the agreements they have reached with each one. Your job is done with your monthly payment. Typically, people are finding that they are able to pay off their debt more quickly in this way because, upon enrolling in a program, their interest rates are lowered by 6% to 10%. Because of the decreased amount of accrued interest, individuals are able to pay their debts off faster, even with making lower monthly payments.

By making on time payments into a debt management program, any bills included in the program can no longer be penalized on your credit report. This fact, therefore, puts a stop to any decline on your credit report. As you continue to make your payments on time, you will be rebuilding your credit as well as getting out of debt. Usually, with these types of programs, debt is paid off in five to seven years. Without the assistance of a debt management company, most people continue to pay the same bills, with mounting interest, for an indeterminate amount of time.

Enrolling in a program to help paying off your debt also provides you with the knowledge, and the peace of mind, that comes with having paid the bills and brought your credit rating back to a good place. Additionally, you have learned some things about managing your finances that will undoubtedly prove invaluable in the future.