Debt Management Services Can Help Consumers Avoid Filing Bankruptcy
by Ellise Walsh

For several months now, consumer activists have been warning that bankruptcy filings are likely to rise. The reasons for this are many. For one thing, wages have not been keeping pace with inflation for several years now. While the difference between the cost of living and the average rise in wages may be small, it can add up over time and cause a big gap between what it takes to pay the rent or mortgage, the car payments and other daily living expenses and what is coming in each month.

In addition, more and more people are using credit cards to finance every day purchases. Routine purchases like groceries, haircuts and other things that used to be paid for in cash are now routinely charged on credit cards. While this may be convenient, the convenience can cost tons of money if the consumer is unable to pay the balance at the end of the month. Few schools teach courses in managing credit, and therefore most consumers learn these lessons the hard way.

That is where debt management services come in. Debt management services not only help consumers manage and pay off their existing debt, but their budgeting and credit counseling services can help ensure that the consumer stays debt free for the long run. And after all, remaining debt free is the goal of any effective debt management program.

Before a consumer can stay debt free, however, he or she must retire his or her existing debt. Fortunately, debt management services can help with this as well. The staff of the debt management service will have contacts in place at the major banks and credit card companies. They can leverage those relationships to get favorable repayment terms for their clients. The repayment terms they negotiate can allow the client to avoid bankruptcy and repay what they owe on friendlier terms.

Debt management services are often able to negotiate lower interest rates on credit card debt, and in some cases to eliminate the interest entirely. They are also sometimes able to convince the creditors to settle for a lesser amount than the full amount they are owed. While settlements may vary, many times debt management services are able to allow consumers to pay back from 50% to 70% of what they owe. The personal circumstances of each client mean that every deal will be different however.

So before you head to the courthouse to file bankruptcy papers, be sure to sit down and talk with a qualified debt management service. You may be surprised at the favorable terms and conditions you can get.



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