by: Michael Saunders

For about 25 percent of those who turn to credit counselors to fix bad credit, more than advice is prescribed. In these cases, in addition to an action plan, a debt-management plan is recommended. A debt-management plan (sometimes called a debt-repayment plan) involves the agency as an intermediary (for a small monthly fee it handles both communications and payments on your behalf) and it includes revised payments that:

A) Are acceptable to all your creditors.

B) Leave you enough money to handle your living expenses.

C) Generally get you out of debt in two to five years.

Such plans include: an alternative to bankruptcy, debt consolidation, or an interest-rate-reduction plan. All these descriptions have been attributed to debt-management plans. In fact, debt management plans offer all these benefits - and perhaps a lot more. Here's how: When creditors realize that you can't meet the original terms of your credit cards or other loan agreements, they also realize that they're better off working with you through your credit counselor. Under a debt-management plan, your creditors are likely to be open to a number of solutions that will be to your advantage. These include:

A) Stretching out your payments so that the combination of principal (the amount you originally borrowed) and interest will pay off your balance in 60 months or less.

B) Changing your monthly payments to an amount you can afford to pay.

C) Reducing your interest rate and/or any fees associated with your loan.

D) Stopping creditors from hounding you day and night.  (continued...)
Repair Bad Credit - The Tremendous Benefits Of A Debt-Management Plan
  Page 2