Online Debt Management

Online debt management was the woman's all consuming passion after a collection agency bully had threatened her with wage garnishment and told her she was a dead beat mom. With tears flowing down her face, she had trouble even pounding out key search words, but eventually she found a national company she had heard of before and began talking to an agent. Online debt management companies are but one part of the network of credit counseling services, with many of them independent and working under the non-profit moniker, located in towns and cities all across the country. The agent was kind and sympathetic and told the woman that two million American people used the service of online credit management companies or local credit counseling agencies in 2007. The particular company that the woman had chosen was a non-profit organization and that gave the woman some comfort.

All credit counseling, with online debt management being no exception, begins with asking the client about income and all debt information. Included in this interview are all expenses such as groceries, charitable gifts, gas, heating, utilities, food and related costs as well as how much all the monthly credit payments are. All of this is required so that the credit management agency or company can know how much of a comfortable monthly repayment can be made towards the client's debt. The comfort level of the client in terms of paying back the debt is of utmost interest to the counseling company, for the plan will fail if the client cannot meet the requirements. Being in the clutches of debt can be as confining as a prison cell, but God can offer all a life of liberty. "Now the Lord is that Spirit: and where the Spirit of the Lord is, there is liberty." (II Corinthians 3:17)

The single mom stated that a couple of small payday loans were beginning to mount in interest very quickly and wondered if those debts would also be covered in the online debt management repayment plan that would be devised. Unfortunately, the payday loan industry has seen fit not to include their products in the counseling plan, but the counselor told her not to worry; later he would share an idea with her to get rid of those cirrus cloud high interest loans quickly. What the counselor did not offer to bring up because the woman never asked was the effect that credit counseling had on a person's credit score. Amazingly enough, many of the components of credit counseling are the same ones in chapter thirteen bankruptcies. This legal filing asks not for loans to be liquidated but rather made more accommodating so that the debtor can pay them. The results are the same on the credit score. Both a chapter thirteen bankruptcy and credit counseling have a very negative impact on credit numbers.

The plan for getting this mom out of trouble would begin by the credit agency negotiating with the lenders for lower interest rates on the consumer loans she had. In truth, most of the negotiating had been done with each lender long before the conversation and in actuality the counselor would know right away how much interest could be taken off each account. For this woman, nine hundred dollars a month in credit payments became four hundred and fifty dollars a month in the matter of a few minutes. The sigh on the phone after the news was audible and then the online debt management counselor shared with the woman that some of this extra money the lady would start having could be put on the payday loans the woman had amassed.

Not a single online debt management counseling service differs in its core plan for clients. The approach has been worked out over the years with all lenders and does not vary, beginning with a cutting of debt payments about in half. Some creditors are not quite so amenable to having their interest rates cut by fifty percent, but the average is about so. With a halved debt repayment, the client is happy and the process can begin with a single monthly payment being sent to the online debt management agency. When the money arrives at the agency, in most cases whether the company is for profit or a non-profit a ten percent fee is extracted from the payment and the remaining amount is sent to each lender. Then over time, as the first account is paid off, the monthly money paid on that account is placed on the payment of the next one. In a very short amount of time, even the largest of debts can be paid off in five years.

But there is a flea on the dog's back about all of this. Less than fifty percent of all clients using an online debt management or a local credit counseling service stay with the plan through fulfillment. No discipline, too much discretionary money each month, a love of gadgets or eating out or traveling or, you name it, but people jump ship. If they had only put some of that discretionary money on top of their agreed monthly repayment and the credit could have been paid in four years or maybe three and a half. And jumping ship in the middle of this process can hurt someone's credit that much more. So before even agreeing to such a plan, make sure that all resources have been exhausted. Is there an extra job that could be taken on or possessions that could be sold to get that debt down to a manageable level?

Add to: File Insurance Business article Teen Photo Images