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Debt management companies can certainly be a good thing if you have
financial problems. Although there is a lot of negative publicity about them
most of the companies are legitimate and want to help you out of your situation.
They cannot write off your debts, but they do help you find ways to repay them
in full. They do this by working with your creditors to get interest lowered and
late fees waived. It is true that you can contact your creditors yourself and
attempt to do this, it is better to use a prpofessional debt negotiator. Your creditors are more likely to work with a debt management firm
faster than they will you. This may seem mixed up but it is true that a debt
firm will have more luck and get better rates than you can.
All the best debt companies are commercial organisations so they do charge for their services. However, these are usually just taken out of the payments you make into your payment plan, so you are not normally faced with any additional fees besides these. Any company that advertises free plans should be treated with caution as this is often just dishonest advertising and they are just not telling you that their fees are in with your payments.
Debt management companies are experts at working with creditors. They know how to approach them to get the best deal for you. What you have to pay the debt management firm will be small compared to the amount of money they can save you. What is also nice is they can do it in such a way that it will not have a big impact on your credit rating. Many creditors will report that you are undergoing a debt management plan to pay back their loans. Sometimes the debt firm that you use can talk the creditors into not putting any negative reports on you credit as long as you stick to the new payment arrangements.
Many times using a debt management company will prevent you from having to file a bankruptcy. It usually takes severe debt problems to get you to get the help that a firm like this provides. This is one of the reasons creditors will deal more rapidly with the firm than with you. They realize that your situation must be dire for you to be getting help. Since the creditors will lose out completely if you file for bankruptcy they will nearly always settle with a debt management company.
These firms will get the interest rates lowered and the late fees waived for you. That is how a debt management plan works. You will pay the company that you are using who will in turn pay your creditors. This is where you need to do your part. Before you stop paying your creditors yourself make absolutely sure that the debt management firm is paying them. You do not want to end up in worse shape than you are already in. Make sure to stay on top of the payments and stay in communication with both your creditors and the firm you picked.
You can usually find a good debt management company by looking online and finding names of companies that you are familiar with. You do want to use care when picking the firm. Make sure they are going to help and not hurt you. Know what their fees are and how they get paid. Is it monthly or weekly? Do they take their money out of the monthly payment you send them? Do they have any upfront costs? Do not do anything without a written contract. If you use caution when shopping for a debt management company you are sure to find the help you need.