When credit card debts become unmanageable the best thing to do is to seek the advice of a professional debt management service (DMS). The DMS representative will negotiate with your creditors, arrange for lower rates of interest and help you consolidate the payments if you have more than one major debt. The DMS will work with you to prepare your monthly budget and oversee all your monetary transactions till the debts are completely paid off.
When you avail a DMS, every month you will have to deposit a fixed amount of money that will be used by the servicing agency to pay your various credit card debts in a systematic way – generally the debts with high rate of interest will be given preference to reduce your debt burden. While availing the service you are not allowed either to use the credit cards on which money is owed or to apply for fresh credit cards.
The DMS will keep a close eye on your spending to ensure that the expenditure is not exceeding the budget. With proper guidance you can even save small amounts after meeting the payment obligations. With professional guidance you can completely eliminate credit card debts in a remarkably short period and get a fresh credit rating.
Sounds very promising! But how to select the best DMS? We are bombarded with advertisements in newspapers, TV and radio offering debt management services and making promises of cleaning up bad credit histories overnight. Some services even promise a new credit identity! There are countless online services whose credentials are difficult to determine. So it wouldn’t hurt to double check before signing for a service.
If you are cheated by any counterfeit debt managing company you should immediately report the matter to your local consumer affairs office or to the Attorney General of your state. Their toll free hotline numbers work 24/7.
DMS is not the panacea for all the credit card debt problems. Experts believe that before enrolling for a DMS one should take credit counseling. A certified credit counselor will review your financial situation, teach you money management skills and offer you customized advice on choosing a reliable debt management plan.
Debt management plans are not suitable for everybody. Some people may be in such serious financial mess that filing for bankruptcy might be the only alternative left. Only an experienced and certified credit counselor can guide whether you should go for a debt management program and if so which would be best suitable to your situation.
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