When it comes to finding credit card debt relief, many of the relief options require you to have a good financial position. Taking a debt consolidation loan, or making a balance transfer requires that you have a good credit score to qualify for the new line of credit. A credit card company is more likely to work with you during debt negotiation if you have made all payments on time. Conversely, a debt management program can provide relief for your debt, even if your finances are far less than perfect.

If you have explored your options, and a debt management or management program sounds like the right solution to debt relief, or if you have any questions about what is the best option for your situation,

 to speak with a certified credit counselor. With the help of a real credit professional, you can get the information you need to make the right decision for your finances.

How does a debt management or management program work?

Enrolls in a debt management program (DMP) through a credit counseling agency. A certified credit counselor will first review your budget and your debts to make sure you qualify to enroll in the program. Once you are enrolled, the debts that you enter into your debt management plan are combined into one low monthly payment. You pay the credit counseling agency a single monthly payment, then they negotiate and pay your creditors on your behalf. Continue in the program until you pay in full the debts you entered into the program.

A program of administration or management of debts, lowers the amounts of your monthly payments, since it drastically reduces the interest rate that is applied to your debt. The interest rate in a debt management program is typically between 6% and 10%, which is much lower than the interest rate for which you would qualify, even with very good credit. A lower interest rate means lower monthly payments. It also means that you get out of debt much faster. In some cases, consumers who sign up for a management or debt management plan are completely free of debt in just three years.

Does the credit rating affect eligibility?

Unlike other debt relief options, your credit score and credit score are not really factors when it comes to your ability to sign up for a debt management program. The low interest rates applied to your program are possible, because the credit counseling agency has established relationships with creditors, which allows you to negotiate with them on your behalf. As such, you can enroll in a debt management or management program and take advantage of having these low interest rates on your debt, even if you have bad credit.

Do the accounts have to be current or current to qualify for debt management?

No. Even if you have fallen behind on a few payments or have stopped paying a full payment, you may still be able to include that debt in your debt management plan. This makes debt management programs a good candidate to provide debt relief if you are already falling behind. Your certified credit counselor can review each debt and confirm that you are eligible to include it in your program. In addition, if any of your accounts were in default when you started your debt management or management program, most creditors will agree to update your accounts once three timely payments have been made through the program.

What does a credit management or debt management program do?

Often people are concerned that a debt management or management program will negatively impact their credit, but in truth a debt management program can improve your credit when done correctly. Once you are enrolled in the program, creditors can not impose any additional fines on your credit report for any of the debts that you have included in the program. In addition, successfully completing your debt management program allows you to build a positive credit history, which can help improve your credit rating if you are up to date with all your other monthly bill payments as well.

What types of debts can I consolidate with a debt management program?

Credit card debt is the main type of debt that most consumers assign to a debt management or management program. However, in some cases, you may be able to consolidate unpaid medical bills, as well as some types of payday loans or cash advances. Unpaid medical bills have certain time restrictions, while only certain payday lenders allow these debts to be consolidated with a debt management program.