Debt Management Program

Debt Management Program

When it comes to getting out of debt, you have a variety of options. On this page, we'll outline each debt management program for you so you can get an idea of what's out there.

Variety is the Spice of Life

If you've got a lot of debt, the debt management program you choose will depend first on the kind of debt you have and second on what your resources are. To illustrate this point further, we've explained each plan below, and hopefully we can show you how each will work toward a debt management solution:

• Student Loan Debt Consolidation - As the name implies, this is for people with a lot of student loan debt ($10,000 or more, to be exact). This debt management program combines all of your student loans, gives them one low interest rate and lowers your monthly payments by as much as 50% (because they stretch them out over a longer period of time).
• Debt Settlement - This is for people with a lot of cash saved, but not enough to pay off all their debt. What happens is a debt settlement company contacts all your creditors to get your balances reduced by 60-80%. If your creditors agree to this, they will want their money immediately. (That's why you have to have the money saved up and available.) Your creditors will report it to the credit reporting agencies and it will have a negative effect on your credit.
• Debt Consolidation Loan - This debt management program is a loan given to you to pay off your unsecured debts all at once, leaving you with the loan to pay back. To qualify, you have to have collateral. The benefit is that the interest rate on the loan is so low that you can have it paid off and be out of debt in five years!
• Debt Consolidation Mortgage - This debt management program is for homeowners. It's a loan from your mortgage company to pay off all your unsecured debt. That amount is then added to your mortgage, so you're essentially paying off all your credit card debt at the same interest rate as your mortgage, which these days is typically 4-6%! Sure, your mortgage payment goes up, but not by much.
• Debt Consolidation - This program is for anyone. When you enroll, your debt consolidation company contacts your creditors to get your balances reduced by getting interest rates lowered and past fees removed. Then the new balances are combined, and you pay the debt consolidation company one payment each month, which they distribute among your creditors. The result is that you are out of debt in five years.

So did you figure out which debt management program is for you?

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