When people visit a professional to discuss financial issues, they are usually hoping to come out with some enhanced knowledge and and an awareness of the next steps to tackle their challenges. A debt management plan is a common way that professionals will work to address manageable debt for Connecticut clients. Here are a few things people should know about these plans in order to decide if this is the best path to take in their situation.
Many people mistake debt management plans for debt settlement. Debt settlement is a process typically led by a legal professional where people are able to reduce the amount they owe. This is usually the best option for people who have more debt than they can reasonably manage. Those who choose a debt management plan will have to pay back all of what they owe, with the only reduction being reduced fees or interest from a lender involved in drafting the plan.
While debt management plans will likely not make much of a debt in the actual amount owing, it can simplify things by centralizing all debt under one repayment plan. Usually this involves all payments going to the credit counseling agency. However, this convenience can come with a cost, as participation in a debt management program may show up on a credit report.
For people with manageable debt who just cannot seem to get a handle on things, debt management programs may be a useful tool. However, the majority of people may find they cause more harm than good over time. Those seeking unbiased support and advice that includes bankruptcy and debt settlement options are better off speaking with a Connecticut lawyer who focuses his or her professional practice on these issues.