Debt Management

How Can the Debt management Program Help Me?

The Debt Management Program primarily benefits consumers who have accumulated a minimum of $3,000 in unsecured debt and are now stuck paying high interest rates making it impossible to payoff the principle in a reasonable amount of time. Depending on the client's creditors, what usually happens to these consumers, is that they fall behind on some of their payments, which doubles or triples their minimum payment. Interest charges accrue and, being behind, late charges should be assessed monthly, continuously increasing their debt. We can help either up to date clients or client that have fallen behind with their creditors.

Fortunately, for you, we work with a network of non-profits. This allows us, to give to you, the Client, a debt management plan that will help you eliminate/reduce your interest rates. This is done by concessions given to our non-profits by the creditors. While the program and benefits vary among creditors, usually, monthly payments and interest rates are reduced, late fees are stopped, and accounts are brought current. Creditors without hardship programs often may grant similar forbearance upon receiving the agency's request.

Once officially enrolled, collection calls regarding accounts placed in the program may be directed to the credit counseling agency.

Basically, the Debt Management Program:

  • Saves You Thousands of Dollars in Interest and Late Fees
  • Establishes a Manageable Household Budget
  • Improves Your Credit Rating
  • Puts an End to Upsetting Collection Calls
  • Alleviates Financial Obligations and Stress
  • Plots Your Course on the Road to Debt Freedom!

Only unsecured debts, such as, credit card accounts, medical bills, service charges, personal loans, signature loans, and certain installment loans can be placed in the Debt Management Program.

Utility bills, insurance payments, membership dues and other ongoing services cannot be placed in the program, unless the service is no long required from the creditor and there remains an outstanding balance of over $100.

Secured loans, such as, mortgages, auto loans, leases, and money obligations, such as, rent, taxes, child support, alimony and fines cannot be placed in the program. Money owed to friends and family can be placed in the program, however, in most cases, they are omitted in anticipation that the friend or relative will offer leniency.


The following types of accounts can be placed in the program:

  • Credit Card Accounts
  • Store Credit or Charge Accounts
  • Gas Charge Accounts
  • Medical and Dental Bills
  • Personal and Signature Loans

Some creditors will not allow a payment reduction, as is often the case with installment loans. In addition, sometimes the current payment is already very low. If a payment is set too low, the account may never liquidate. Because of this, and in keeping with a creditor's policy on minimum payments, the payment may actually need to be increased. Nevertheless, depending on your mix of creditors, your "total monthly debt service" may be reduced significantly.

A payment reduction, however, is not important to all clients. Some clients, for example, are more interested in a fixed monthly-consolidated payment, interest reduction, stopping late fees and bringing their accounts current. Some clients even prefer a higher payment, thus accelerating the time it takes to get out of debt.

Exactly how much your overall monthly payment can be reduced will depend of your mix of creditors and other factors. Most creditors have policies regarding minimum payment, typically ranging from 1% to 3% of the outstanding balance at the time of enrollment.

Most credit counseling agencies calculate a client's fixed monthly-consolidated payment based on a "fixed" percentage, for example, 3% of the total debt placed in the program. Enrolled through our agency, each payment to your creditors are "individually" calculated based on their policy. Using this method guarantees that your payments are set at the "lowest" amount acceptable to your creditors, while at the same time, allowing you the option of increasing your payments whenever extra funds are available.

Creditor's policies regarding interest reduction vary drastically, ranging from no change to freezing interest. With interest rates typically at 10% to 25%, interest reduction can save a client thousands, and for heavy debtors, tens of thousands of dollars in interest. Obtaining interest reduction on just one or two accounts in itself may warrant enrollment in the program.

Let's look at the following example:

A credit card account with a $3,000.00 balance at 20% interest with a "fixed" monthly payment of $80.00 will approximately take 6 to up to 10 years to amortize. The total interest paid over the interim will amount to $1,103.48. Typically, creditors who allow interest reduction reduce to one of the following rates: 13%, 10%, 8%, 6% and 0%.

If a client has two accounts each with a $3,000.00 balance, and one creditor allows an interest reduction to 10% and another stops interest, over the interim the client will save a total of $2,433.43.

Consider also that the example is based on a "fixed" monthly payment. Usually, individuals experiencing financial hardship only pay the minimum payment. As a result, liquidation could easily exceed 25 years. This is especially true when late fees, over limit fees and annual fees are assessed. For most debtors, the interest paid on a $3,000 debt will substantially exceed the amounts listed above.

Upon entering the program, a "fixed monthly consolidated payment" is calculated based on the "lowest" payment amount acceptable to your creditors. While it's true that some creditors will accept any payment amount (rather than nothing), the fact is most creditors have policies regarding minimum payments and will only reduce interest, stop late fees and re-age past due accounts if their minimum payment requirement is met. The amount of your fixed monthly consolidated payment is then forwarded by you to the agency, which is turn disburses the funds to your creditors on a monthly basis.

When first applying for enrollment, our agency "estimates" this payment based on the information provided by you. We then assess if you could maintain the payment while sustaining a comfortable standard of living. If so, approval is generally granted.

Upon receipt of your enrollment material, the amount of your fixed monthly consolidated payment is re-calculated based on your actual statements and any changes that may have occurred since you applied. Upon completion, an enrollment package is prepared and sent to you via 1st class mail. This package contains information regarding the program and your accounts, including a revised estimated fixed monthly consolidated payment. The revised estimated payment is generally the same or close to the original estimate, but in any case, usually extremely accurate. Your "actual" fixed monthly consolidated payment can only be determined once all of your creditors respond to the proposals sent by the agency.

Having a fixed payment provides an exact dollar amount in which to budget. You draft a single check each month to ultimately liquidate all your accounts placed in the program.

A fixed monthly consolidated payment offers a quick and effective means to liquidate debt. As accounts are paid off, the agency systematically applies the excess amount to other accounts remaining in the program.

All accounts placed in the Debt Management Program will automatically be closed by your creditors. This should be regarded as a prudent course to take realizing that it was probably the ease of using these credit cards that caused your current financial situation.

In some circumstances, where reason dictates, clients may be allowed to withhold a credit card or two from the program.

Examples include:

  • When there are co-signers on the account that are not included in the program
  • Accounts used solely for business purposes and paid off monthly
  • Accounts with balances less than $100 and used solely for emergencies
  • Credit card accounts secured with a security interest

Upon completing an application, you may request that an account be omitted. The agency typically grants legitimate requests. You should be aware, however, that some creditors insist ALL accounts be included in the program, otherwise upon discovery they may deny forbearance. In such cases, the client may have to include a withheld account(s) or bear the consequences of not including the account.

Having a credit card is not a necessity of life. We encourage you, however, to open a "secured" credit card account or use a debit card for emergencies, online purchases, car rentals and other circumstances where a credit card is required.


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Debt Consolidation

debt consolidation informationThe Credit Counseling Program primarily benefits consumers who have accumulated a minimum of $3,000 in
unsecured debt and are now stuck paying high interest rates making it impossible to payoff the principle in a reasonable amount of time.


Basically, the Credit Counseling