Is debt management good? Is there a short or long term catch?

Answer 1

Hi, these articles will answer your question:

Debt Management and Building Wealth
http://www.askaquery.com/Answers/qn1581

How to lower your debts?
http://www.askaquery.com/Answers/qn1576.html

How to reduce debt : How to lower your expenses?
http://www.askaquery.com/Answers/qn1577.html

Online Debt Management Programs
http://www.askaquery.com/Answers/qn1580.html

Answer 2

It's a good way to get yourself out of the credit card trap. It reduces your interest payments, requires you to only make a single payment each month, and teaches you to live on your cash. The catch is that you cannot use those cards anymore. Can you handle that? It also does make your credit rating dip at first. But, once you get those balances down, and have a record of on-time payment, it will go back up. Be sure that you are still able to take out a mortgage or get a car loan while you are in debt management, assuming a bank will give you credit. In the end, if you go with a non-profit debt counseling company, you can really save money on the interest rates, and get out of debt much more quickly than trying to go it at over 20% interest and making minimum payments. Watch out for fees to the counseling service, and anything that sounds like a "Pre-payment penalty". Also, don't let them use your house equity as collateral--that's not debt management--it's a second mortgage, and you could lose your house if you default. Good luck getting out of debt.

Answer 3

There is a catch--you will not qualify for most mortgages while you are still enrolled. This is a short term catch.

There is no long term catch. Debt management is good for many situations, as long as you get help from a qualified credit counsellor.

Answer 4

i assume you're talking about consumer credit counseling. there is only one good thing about it - you can get your debt slightly reduced. yes, there is a catch. if you try to obtain a mortgage in the next 2 years you will not get one. however; if it is the alternative to filing bankruptcy then you better do it. BK will haunt you for the next 10 years. credit counseling will haunt you for as long as you are in the program and then for 2 years following it. I say do debt management ONLY if you have no other options (like a personal loan from family to pay your debts off).

Answer 5

No! any future lender will review this as a chapter 13 bk. It will not stop all interest charges where the bk 13 will. If I were in your shoes I would file the bk 13. These credit counseling agencies will take your money and hold it till every thing except your home is in default. Then they will try to settle with them. Many will reduce the amount or the rate of interest but you will pay a fee to these companies every month for handling YOUR money.

Answer 6

From the research I have done on it for myself ( this was years ago), it puts and ugly mark on your credit report and as stated above will mess up a mortgage for you. I have found that you can usually accomplish similar goals by doing the work yourself. If you use a company, they charge you a fee and I am sure they charge the CC company. Most credit issuers would be more likely to work with you , and it may help reduce the negative marks if you work with them to get your debt paid off. Most of them will freeze you accounts as well so you do not further yourself into the abyss.

Answer 7

Any debt that offers a tax advantage is good if the funds offer a marginal profit.

Answer 8

It is good if the goal is to be debt-free as soon as possible. However if it is treated as an instrument to borrow more/ continue speding -- I smell trouble around the corner