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Debt Management
Case Studies

Henry called in from Columbus Ohio in October 2008. He owed 9 different creditors a total of $10,254 at interest rates ranging from 21%-29%. His monthly minimum credit card payment was $366, which he would have had 5 to 20 years to repay his debts. His FICO score? was 476.

Being put on a debt management plan gave him a minimum monthly payment of $376 at an average interest rate of 12%. His plan will take 3 years to pay off. As of November 2009, his credit score had risen to 579.

Henry is benefitting from his interest rates lowering to an average of 12%, allowing him to pay off his debts much faster. By paying only $10 more than his previous minimum monthly payment, Henry will pay off over $10,000 in debt in 3 years instead of 5 to 20. Also, his credit score went up 103 points after the first 13 months of his 3-year plan.

Note: This is an actual Springboard DMP client. The client?s name and possibly location has been changed to protect their privacy. Read More Debt Management Case Studies >>

Credit Card Debt Consolidation

Understanding the different debt consolidation programs available will help you in choosing a safe way to consolidate your credit card debt

Credit card debt consolidation can take many different forms. Some people try to apply for a new consumer loan to pay off their credit cards, thereby consolidating many different debts into one. The risk here is that if you have not changed your spending habits, then you can now get yourself into even more debt.

Unfortunately, in the current economic climate, banks and other lending institutions have tightened their lending standards, making it almost impossible to be approved for one of these kinds of consolidation loans.

Some people consolidate their credit card debt by taking out a secured loan, like a home equity loan. This is not something we recommend, as it means trading ?bad? debt (credit cards) for good (mortgage). It is not advisable for you to put your home at risk to pay down unsecured credit card debt. And because the housing market continues to be in turmoil, most people are finding they don?t have as much home equity as they thought.

A Safer Way: You can achieve a consolidation of your credit card debt without getting more debt or by putting your home and other assets at risk.

With a Debt Management Plan (DMP), your monthly debt payments are consolidated. All of the payments you would normally make to multiple credit card companies are lumped together in one convenient payment that is dispersed to each enrolled creditor every month.

DMP Benefits: When you enroll in a debt management plan, your creditors offer various concessions to make it easier to succeed. They may lower your monthly minimum payment, waive fees, lower interest rates, or re-age delinquent accounts. In the end, we negotiate for a payment that is more affordable to you, and designed specifically to pay off all of your debts.

Consistency: Your payment is processed on a regular schedule, which is good for the health of your credit rating. As you pay off individual creditors, the amount being sent to them is divided among your remaining creditors. In this way, your payment remains the same, and your debt repayment program ?snowballs? until you?ve only got one creditor left, and they receive the full amount of your DMP payment until your last debt is paid in full.

Credit card debt payment consolidation services: This service is only offered with a comprehensive credit counseling session, which is free of charge. A non-profit debt counselor will help you find the right option to resolve your situation. That includes identifying ways to reduce expenses, receiving personalized budgeting advice, and other financial resources including a debt management plan, if that option is right for you. If you qualify for a DMP and are interested, you are set up on a regular monthly payment with the help of your credit counselor.

Your counselor will help you build a budget you can live with, talk about strategies to make ends meet with your new consolidated monthly payment, and help you get started on your debt management plan. If this is the kind of debt relief you are looking for, then don?t hesitate, call (800) 294-3896 or schedule a priority appointment now for a free, comprehensive counseling session, and if you wish to enroll in a DMP, talk to your certified nonprofit counselor about how to get started.

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