Debt management companies these days have a very strong presence in the media, and make very appealing pitches that offer to help consumers get out from under crippling debt load. These companies have sprung up everywhere and have quickly become a thriving industry because there are so many people in serious debt.
The prospect of removing indebtedness over a period of a few years is a powerful incentive to sign on with such companies, and the lure of being debt free is irresistible. But if this seems like a deal too good to be true, in many ways it is exactly that.
The Downside of Debt Management Companies
A debt management company really can help make an arrangement between creditors and debtors that will result in eventual removal of indebtedness. Many creditors have already worked with debt company agents in the past, and such deals can be arrived at relatively easily.
After all, it does benefit the creditor to recover at least some portion of the bad debt, and it does benefit the debt management company, because they generally receive a monthly sum from the regular payment as well. In one sense, it even benefits the debtor, because some pre-determined period of time, the combined indebtedness will be relieved.
The unfortunate part is what comes afterward. In most cases, working with a debt management company will show up on a credit report and is weighted the same as if the debtor had declared bankruptcy. In other words, after making an honest and determined effort for something like five years to improve credit standing, the debtor finds that he/she may be worse off than before.
The Best Debt Management Company
This being the case, the only really good debt management company out there is – the debtor himself. The only way to avoid all the negative repercussions of working with a debt management company is to never become involved with one. Again, this is not because they’re dishonest, it’s simply because it leaves your credit history in a shambles.
The one true way to navigate through a period of several years without incurring later difficulties is to work hard and repay that debt on your own. Work out a plan that you can afford, based on your income and other bills, and just steel yourself to endure the pain. It won’t be appealing, but it will work.