Debt management programs are plentiful across America. People that get into financial trouble have many choices when considering debt relief strategies.
There are basically two forms of debt relief programs apart from bankruptcy. The first has been around since the 1950’s and became very prevalent in the 1970’s with a sharp increase in credit card and consumer debt from other purchases such as automobiles, houses, home furnishings and other goods. They are known as traditional debt management plans. This is a system where a separate company is set up to negotiate between the debtor and the note holder. The credit counseling company offers a debt management plan (often referred as a DMP) receives a fee from the consumer and is sometimes entitled to a percentage of the funds collected against the note. They are traditional in the sense that it registers as a for profit business. Some may even administer a debt consolidation loan but that has disadvantages if the consumer does not change the behaviors that caused the trouble.
The non-traditional credit counseling services are structured as a non-profit. They claim to totally free from constraints of normal business entities because their primary mission is to assist the consumer as opposed to maximizing profit for the shareholders. These companies typically charge a fee to the consumer for the service and like traditional DMP’s, they may charge a percentage against the loan balance. Some of these entities have ventured into the medical debt along with normal consumer and credit card burden. Both forms of consumer counseling provide a valuable service to debtors who wish to resolve money problems without filing bankruptcy and alleviating professional debt collection effort.
There are BIG red flags! Watch out consumers! In the 1990’s there were massive consumer credit counseling scams that took money for services that never took place. There were reports across the country of debt relief, debt consolidation and credit counseling scams as some even made the national news. One company had the same investors but would shut down the business when the heat was on, change addresses, and re-surface under a different business name. They were so bold to advertise nationally each time they emerged! The phrase, “Buyer Beware” has never been more applicable.
Perhaps the best strategy to address money problems or find research on debt management programs is to read and listen to experts. There are many financial commentators across the national media. Suzy Orman, Dave Ramsey, Clark Howard and many others have written books that are very, very informative. Even Oprah Winfrey can help refer experts to the issues by visiting her website. Other informative shows that provide excellent information are Fast Money, Money Matters, CNBC and other networks. Many local news programs have entire departments and segments dedicated to business and financial topics
Use these resources and finally, seek real counseling. The habits that result in financial ruin are likely rooted in behavior disorders. Like overeating, alcoholism, or drug abuse, character flaws have to be identified but there is a measure of healing that may be needed. Old habits are hard to break! New habits can be exciting but the first step is to find the necessary resource that will truly help.
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