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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 >>

Safer Alternatives to Debt Settlement

Although debt settlement is an attractive option, there are safer ways to pay-off excessive

If you think a debt settlement might be a good option for you, but all of the negative consequences of a settlement have you concerned, you should consider the alternatives.

You can achieve debt relief without putting your credit at risk, without inviting a lawsuit, without subjecting yourself to collection calls. A good debt management program can help you become debt free in five years or less and leave your personal finances and your credit rating stronger than you started.

A Debt Management Plan (DMP) from a reputable nonprofit credit counseling agency includes free, personalized budgeting advice from a certified counselor. You?ll be able to create a plan to become debt free and make ends meet from month to month. The budget you create during your counseling session will be yours to use whether you sign up for a DMP or choose to self-administer your own debt repayment plan.

A DMP also includes concessions from your creditors to make it easier to make your monthly payments. By lowering interest rates, waiving fees, and re-aging accounts, the expenses involved with making your debt payments are reduced, and you?ll find it easier to keep up with your consolidated monthly DMP payment.

If your debts include a mortgage loan that is in trouble, you can combine a DMP with loan modification to get debt help with all of your financial obligations at once. Seek out a nonprofit counseling agency that is HUD certified to provide free assistance and advice in applying for a loan modification.


For some people, bankruptcy is the best option. This includes a lot of individuals who started out with a debt settlement program and failed to reach a successful settlement. Like settlements, bankruptcy should be a last resort for consumers who have tried every other option to resolve their debts. However only from speaking with a bankruptcy attorney will you be able to weigh the pros and cons of bankruptcy for your unique situation.

Bankruptcy carries negative consequences, like a damaged credit rating. Some consumers in dire circumstances may decide to opt to seek legal advice on bankruptcy to move on with life now, rather than be exposed to the risks of debt settlement for a prolonged period of time.

If you are down to a choice between bankruptcy and settlement, consider:

  • Have you truly considered all of your options? Have you talked to a nonprofit credit counselor?
  • Do you have enough money on hand to make a settlement offer today? If not, bankruptcy may be a better option.
  • If you opt for bankruptcy, the collection calls will stop. With a debt settlement program they may not.
  • Is your settlement negotiator proposing to spend years accumulating funds for a settlement offer? You may end up being sued and/or forced into bankruptcy in that time anyway. Bankruptcy stays on your credit report for 10 years, but the negative impact it has diminishes with each year. If you?re going to spend several years working on a settlement, declaring bankruptcy now allows you to rebuild your credit score during that time.
  • In bankruptcy, your creditors must accept the court?s order. With a settlement, the creditors are free to reject your offers until they get an offer that appeals to them.
  • Is your debt to an original creditor, or to a 3rd party debt collector? If you have enough money on hand for a settlement and your debt is owned by a 3rd party, you might opt for a settlement. Otherwise, the money is saved in the bankruptcy and potentially completed faster, putting the damage to your credit behind you now, rather than later.

Please note: These statements on bankruptcy should not be construed as legal advice. If you are seriously considering bankruptcy, you should seek the services of a qualified bankruptcy attorney.


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