Guide to Debt Management
What is debt management?
Debt management companies such as AmeriDebt, as seen on tv, offer a service where you pay one monthly payment to them while they distribute that money to your creditors to whom you owe money. They are negotiating lower interest rates and balances with the creditors and charging you a hefty fee to do so. Other debt management companies include Freedom Debt Relief, Christian Debt Consolidation and Debt Solutions USA. Check out Creditinfocenter.com for a more comprehensive list of debt management companies.
How should I manage my debt?
First off, beware of debt management scams, of which there are many. According to Dave Ramsey’s site, even if they do help you get your debt paid off, most likely your credit score will suffer the same as if you went through a Chapter 13 bankruptcy. If you do choose to use one of these companies, it’s best to research them online and at the Better Business Bureau or at the Consumer Federation of America. We recommended instead that you management your debt on your own by setting a budget and slowly chipping away at your debt. It can and will happen with perseverance.
For more information
The Truth About Debt Management by Dave Ramsey
A Debt Trap for the Unwary Businessweek.com
Tips on how to use a debt management company Creditinfocenter.com