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Finding the Best Debt Management Companies Near You

Generally, people who have accumulated debt over a long period of time may feel that everything’s going out of control with regard to keeping track of debts and paying bills, and tend to use a debt management service. When you join a debt management service, make sure that you’re comfortable with the service, and that the service provider will work in your best interests, and that it's one of the best debt management companies near you.

What is a debt management company?
A debt management company functions as an intermediary between you and your creditors. You make a single payment to him, and he/she, in turn, will use that money to pay off your various debts. The company will receive a commission based on a certain percentage of your monthly payment, and may also get savings on payments to creditors.

Possible impact on your credit file
If your debt management service gets your creditors to give you reduced interest rates or write off some of your debts, these will be reflected on your credit record, but it will be much less significant than a history of missed or late payments. Moreover, the only other alternative to debt management is filing bankruptcy, which has more lasting repercussions.

Unscrupulous dealers
Debt management services generally charge near to 10% of your monthly payments as commission, and also get rebates from creditors. This, often, tempts a lot of unscrupulous dealers to start business as a debt management company and encourage people to sign up for their services, which are rarely in the best financial interests of the customer.

Late Payments
Given that a lot of people have trouble sticking to their debt management plan or face a sudden financial crisis, it’s wise to ask the company what happens if you miss a payment, make a payment late or if you’re unable to further continue your payments.

Not – for – profit debt management companies?
When more and more private debt management companies sprouted up, people were always advised to go for the non – profit debt management companies. The whole thinking behind this approach was that private companies would seek to get high commissions, whereas, non – profit ones do it as a public service. However, there’s a difference between ‘non – profit’ and ‘charitable’ organizations. A lot of fraud companies advertise themselves as ‘non – profit’, though they are anything but!

However, you can save yourself from the trouble of such organizations by checking whether they are accredited by the Association of Independent Consumer Credit Counseling Agencies or the National Foundation for Credit Counseling. These companies are less likely to charge exorbitant fees.

Something going wrong?
If you’ve made payments to the debt management company in time, but find that the creditors haven’t received it on time, you should inquire the company about this. If they are late in making payments, or aren’t making any at all, it’ll hurt your credit rating. Also, if the company is charging some unreasonable fees, and settling these fees using your monthly payments, it would be a good idea to stop your association with them.

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