Debt Management

Debt management is not just about managing the debt but more importantly, paying it off!
If you have numerous credit card accounts and want to pay them off as fast as possible, disciplined debt management or a debt management plan is essential to success.  Debt management is not just about managing the debt but more importantly, paying it off!  The most basic and important rules in regard to getting your debt paid down might sound ridiculously obvious but it’s amazing how many people break them without even realizing it. 

For any debt management plan the first important step is to stop using your credit cards! 
Some people are so used to their credit card lifestyles that they continue to use credit even when they have the cash to pay.  Any kind of debt management is destined to fail if you continue to use credit.  But what about your frequent flier miles or rewards points you are trying to build up?  Forget about it!  When utilizing debt management one must forget about incentives credit card companies offer and realize that for most people these are tricks designed to get you to use the card more so the credit card companies will make more money off the interest they charge.

Organize your cards by interest rate and make higher payments to the higher interest accounts, ideally far above the minimum required.  With limited resources it’s important for your debt management to focus on the less favorable accounts.  Low interest accounts can get by with minimum monthly payments because each payment is actually paying down the principal.  With that being said, a self disciplined debt management plan is only useful when one has the funds available to pay more than the minimum monthly payments.  If you are barely affording the minimums or falling behind, a different kind of debt management might be required. 

 

Consumer Credit Counseling & Debt Management

Two program options available are Consumer Credit Counseling and Debt Settlement (Debt Reduction).
These two programs both can both be categorized under the term “Debt Management” although a DMP (Debt Management Program) is usually associated with Consumer Credit Counseling .  The goal of a CCC program is to enroll the client in a structured pay off program and in some cases reduce interest rates through negotiations with the creditors.  This kind of debt management program can be beneficial to those managing to stay current but not making any headway with the principal balance.  Debt settlement is designed to reduce the principal debt amount of credit cards through direct negotiations with creditors.  This type of debt management is generally the fastest way to get out of debt without declaring bankruptcy.  The program that is correct for you depends on your financial hardship and the monthly payment you can afford. What about debt negotiations?