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Choose the Right Debt Helping Services

A lot of people are not exactly sure about the features of the different debt helping, management services out there and what they could do to your credit ratings. Therefore, this article looks at the different management services so that you can choose the right services in helping your debt.

1. Credit Counseling
I would recommend this to someone who doesn’t have enough discipline to draw up a budget and stick to it. Credit counselor’s great way to keep track with those mountains of bills, and, moreover, creditors are willing to accept a smaller payment per month if you enroll in a debt helping repayment plan.

In a nutshell, all you have to do is make a fixed monthly payment to your credit counselor, who’ll, in turn, make payments to your creditors according to a schedule drawn up. The credit counselors charge a nominal fee, and require that you sign an agreement saying that you won’t obtain any more debt.

Generally, all your payments should finish by 48 months. The advantage of this is that it really busts a lot of stress and improves your credit score.

However, a big disadvantage is that people tend to forget about the other debts that are not included in this plan. You should remember to check your statements regularly to see whether the payments are being made, and make sure that creditors stick to their promise of eliminating or reducing interest.

2. Debt Helping Repayment Plans

Unlike credit counseling and debt consolidation, a debt repayment plan won’t erase your credit history. Any information regarding your accounts, if accurate, may be kept on record for up to 7 years. Creditors can also report details regarding payments made through debt helping repayment plans, including any payments that haven’t been made on time, or any debts that have been written off.

3. Debt Helping Consolidation Loans

This generally involves taking out a loan to pay off all other outstanding debts. You consolidate all your outstanding loans, and make one payment for all your debts. This loan would be at a smaller interest rate than that which you would be paying for your currently outstanding debts, and you’d be paying back a small amount every month over a longer period of time.

A question may pop up, ‘Why do I need a debt consolidation loan when I already have several existing loans?’. The first advantage is, by consolidating your loans, you can make smaller monthly payments. Secondly, your life will be made easier by making only one payment, rather than making several payments.

The debt consolidation loan is ideal for a disciplined person who lives within his means. The less – disciplined would tend to accumulate some more debt because of the spare cash in hand as a result of the small payments being made.

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