What to Know Before You Sign Up With Any Debt Management Plans

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by: James Copper
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Date: Mon, 15 Aug 2011 Time: 10:04 AM
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Have you gotten yourself into a pit of debt? Maybe you are feeling depressed from not being able to pay your bills. Or maybe you are paying the bills, but the balances don't seem to be budging. The good news is there is hope for you and your financial situation! Many consumers believe that debt management plans are an easy way out of debt. It is true that they can prevent bankruptcy and if followed properly, they will help you to get out of your unsecured debts in about four to six years. Yet while too many they are a lifeline in a sea that is infested with the sharks that are harassing phone calls, angry looking past due notices from your credit card companies, and the ever present anxiety that there are more bills due than there is money in the account, these debt management plans are not always operating with full disclosure.

For example, did you know that the majority of the debt management plans which are so readily available by credit counseling agencies for free are actually funded by the very credit card companies that are harassing you at dinner? While Visa might be calling you every evening when you are trying to get the baby to bed and is making you feel lower than a snake's belly, Visa is also paying for the credit counseling service that will offer the debt management plans you may flock to in order to get away from Visa.

At face value, this does not seem to be a problem, considering that they help you to get the bills paid and thus offer a helping hand to get out of debt. Unfortunately, this association has bred some rather misleading statements on the part of the credit counseling services, such as the notion that they are able to negotiate credit card fees and interest rates. The truth of the matter holds that Visa tells the debt management plans it funds what their bottom line is. Thus, you are not entering into a partnership of negotiation with the credit counseling service, but more or less a relationship where the bottom line has already been defined.

Knowing this bottom line ahead of time will help you decide which debt management plans are more attractive and useful to you than others. For example, did you know that some agencies will not permit you to include credit cards with which they do not have an agreement? Most commonly this affects Discover, American Express, and also personal loan customers. After going through all the details of signing up for the plan and then be told that a certain card cannot or will not be included is burdensome, especially considering that your credit will be in disrepair at that point. Make sure you know ahead of time which companies will not participate and if you have too many that fall into that category you may wish to consider shopping around for other debt management plans or seek different alternatives altogether.

About the Author

James Copper writes articles for http://www.commercialfinancespecialists.co.uk where you can get free advice on commercial finance