What a Debt Management Program is NOT
A Debt Management Program is not Debt Settlement
A Debt Management Program should not be confused with other programs that sound similar, but which are very different. Our Debt Management Program is an alternative solution to debt settlement (also known as credit card debt settlement and debt reduction settlement).
Debt Counseling Corporation's Debt Management Program (DMP) offers you a personalized way to merge your overwhelming debt and arranges for repayment. Eliminate your debt now while learning how to avoid excessive spending in the future
Disadvantages to debt settlement, credit card debt settlement and debt reduction settlement.
|Most debt settlement companies require monthly payments which are then held on to for months or even years before they are sent to your creditors or the collection agencies now holding your accounts.|
|Your debt will not appear as "paid in full" on your credit report. Instead, it will show that you settled your debt and your credit score will suffer.|
|You may owe income tax on the amount of debt that has been forgiven. Any amount forgiven over $600 is considered income to the consumer. The creditor will send you and the IRS a Form 1099-C at the end of the tax year.|
|Debt settlement companies do not offer consumers free education to help them understand how to handle their finances and avoid getting into debt again.|
Debt Counseling Corporation Is Not a Loan Company
Debt Counseling Corporation does not lend you money. Therefore we are not just one more creditor on your list you owe money to. Over time you will restore your credit history and take control of your finances once again. We help you pay off your debt yourself, with very low interest rates. This helps you take control of your finances and restore your credit history.
The Debt Management Program is not "credit repair"
"Credit repair" companies claim that they can remove damaging information from your credit report. They usually ask for a fee up front, and then claim to work to improve your credit. Unlike our Debt Management Program (DMP), "credit repair" companies do not address the amount of your debt nor do they provide options on how to reduce that debt. "Credit repair" companies do not typically offer the consumer any educational information or counseling.
According to the Federal Trade Commission (FTC), the fact is that nobody can legally remove negative truthful information from your credit report. Please refer to the FTC webpage on this issue at http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre13.shtm for further information.
A Debt Management Program is not "bankruptcy."
There are some key differences between participating in a Debt Management Program and filing for Personal Bankruptcy. Below is a list of the most significant ones.
|Debt Management Program (DMP)||
|Your creditors are repaid 100% of the money owed but at much lower interest rates resulting in the ability to become debt free in a shorter period of time at a much lower payment amount.||
Chapter 13 bankruptcy involves making partial payments. Chapter 7 bankruptcy involves not making any payments to most creditors.
|You do not lose any assets||You may be at risk for losing assets|
|While on the DMP and after, most creditors will approve further credit at competitive interest rates.||You may be able to get further credit, but it will likely be at much higher interest rates, increasing your chances of ending up in the same situation.|
Remember...Bankruptcy has a significant negative impact on your FICO score and remains on your credit history for 10 years.
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