Debt Management Plans to Avoid

Posted by: Sally S. | Dec 29,2007

We’re wrapping up the holiday season by talking about debt management plans. Many people begin feeling the pinch after the holidays, especially in February, when credit card bills start arriving in the mail. A debt management plan, set up by a credit counseling service, can help you organize your finances and pay off your debt. Unfortunately, there are some debt management plans that promise too much but never deliver.  

Be wary of any credit counseling service that tells you that you can’t be sued for your outstanding credit card debt or loans. You are legally obligated to pay for your debts. When you signed up for a loan or for credit cards, you signed a legal agreement stating you would pay.  

If a credit counseling service tells you that you will be making payments to them directly, and that they in turn will pay your debt, verify this information with your creditors. Most debt management plans require that you make payments directly to lenders and credit card companies.  

If a credit counseling service tells you to stop making payments to the companies you owe, or to stop responding to the company’s requests for information, that’s another red flag. You need to have open lines of communication with your lenders and credit card companies at all times.  

If you’re feeling the holiday credit card crunch, a small loan might help. LowerMyBills.com lets you compare prices from multiple lenders so you can choose the right loan for your needs. 

 

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