Debt Management
A relatively new industry, some consumers are unclear about the dynamics behind debt management. Debt management is the process by which a company negotiates with a credit card company to attempt to get them to agree settle a debt that a consumer owes for less than they owe. In some cases, when a settlement program is successful, a debt management client may be able to save thousands off their balances as a result of settling their debts, helping them to become debt free faster on those accounts that were able to be negotiated down.
Debt Management and the Importance of your Hardship
If your enrollment in a debt management program is the direct result of circumstances that you could not control (divorce, medical issues, and job loss) and you can document it, then you're far more likely to get a favorable settlement versus a person who the creditor feels could have paid the debt back in full. If you're buried and unable to afford the minimums or a credit counseling program, but it was more the result of poor budgeting than financial hardship, it's still possible that you'll be able to obtain a settlement. Had you just been diagnosed with brain cancer the settlement in many cases may be a lot more favorable and the managements process a whole lot easier. Sympathy still goes far these days.
Debt Management and the Importance of your Recent Account Activity
This plays into your hardship in a sense because it's all about whether the creditor feels you've been fraudulent in your business with them. For example, if you just bought a plasma TV on your credit card a month ago, you should think twice about doing debt management.
Debt Management and the Importance of your Credit History
More specifically, if you've filed Chapter 7 Bankruptcy in the past 7 years, you may be out of luck. The main draw of debt management for creditors is that they can recover a substantial portion of a bad debt that otherwise could and/or would be completely wiped out by bankruptcy. Unfortunately, if you've filed bankruptcy in the past 2 years, then you can't file again for another 5 years, so a creditor loses some of the incentive to negotiate a balance. That is, in their mind, they may be saying, "This person can't file bankruptcy anyway. What do I gain by lowering their balance?" That being said, even if you have filed bankruptcy in the past 7 years, a settlement can still be reached in some cases. Why? There are two reasons: a) a lot of times a creditor won't be able to collect the debt from you anyway because you may not have any assets or sufficient income, and b) having a sizable part of the balance in one lump sum is attractive when it means the creditor doesn't have to waste time and money chasing you down. Finally, the longer it's been since you've filed, the stronger your negotiating position may be. In other words, if it's been 6 years since you've last filed, then the time line when you're eligible for bankruptcy again is too short for some creditors to risk potentially losing everything by refusing a settlement.
 The National Debt Relief Group can help you find the right solution with a free consultation. You can fill out our Short Application and one of our debt specialists will contact you within minutes, or you can call now – (888) 703-4948.
Debt Management
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