Is a Free Debt Management Program Fact or Myth?

You’re mired in debt and creditors are calling constantly. You’ve been stressed out, frustrated, unhappy and anxious for months as the debt continues to plague you. Does this sound like you? If it does, and you’ve been tempted to use a debt management program, you’ll want to know your options beforehand.

First it’s important to note that free debt management programs are a myth. A debt free management personal program is a company or person that consolidates debt and works out payment plans with creditors. They only work with unsecured credit, so if you’re having trouble with a home or car loan, they’ll be unable to assist with those payments. If there is numerous loans and credit card debt however, they work directly with creditors to pay off that debt. They work with all your unsecured credit and consolidate it into one payment which you make to them. They then disperse the money based on what they have worked out with lenders.

A debt free management personal program will have a fee associated with it. Even the non-profit organizations must charge a fee to pay staff and other incidentals. Also it’s important to keep in mind that not for profit doesn’t mean that employees make small salaries. It simply means all funds go directly into the company. This means that although it’s nonprofit, it can still charge a hefty fee. Sometimes they refer to these fees as “voluntary contributions”. Don’t be fooled by that language, it’s just a predatory set of words for “fees”.

While debt management programs are quite helpful, there are alternatives; especially if the debt you’re having issues with is secured (i.e. home or car).

If you’re having trouble with debt collectors calling, remember these rules:
1. A debt collector can only call between 8am and 9pm.
2. A debt collector cannot call you at work if you specifically ask them not to do so.
3. A debt collector is required to stop contact if you request it in writing.

Your car is valuable, but not so if it’s about to be repossessed. In addition to the full cost of the loan, a repossessed car racks up storage, towing and other fees. If it’s about to be repossessed, sell it immediately and pay off the debt as much as possible.

Your home is the most important asset you’ll have in your life. If you’re having trouble making payments, don’t avoid the issue. Call your lender directly. Lenders usually make less money off the sale of a house than a loan. Most of the time they will be willing to do things like defer payments or help in other ways to reduce the chances of foreclosure.

Know your options before considering any debt management service! You can even contact creditors directly and work out your own payment plans with them personally, rather than paying a service to do so.

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