Normal, traditional debt management programmes are made for people who have more debt than they can pay back. Most of the time, traditional debt management and credit counselling work together to help people deal with their debt problems. But there is also a special programme for people with good credit who need help managing their debt. Read this article to learn more about programmes that help people deal with their debt.
Normal/traditional debt management programmes are made for people whose debts are more than they can pay back. Most of the time, traditional debt management and credit counselling work together to help people deal with their debt problems. But there is also a special programme for people with good credit who need help managing their debt. You can use a specialised debt management programme if you need to keep open one or more lines of credit for business or personal use.
A specialised debt management programme works about the same as a traditional debt management programme. However, there are some extra steps that need to be taken to properly close the accounts and to be included in the debt management plan before a proposal is sent to the credit grantors to help protect the consumer's credit rating.
In a traditional debt management plan, many of your creditors will close your accounts and put "closed by creditor" on your credit report. This will hurt your credit score and make it harder for you to get new credit in the future. But if you close the account yourself, it won't hurt your credit score. This is how a specialised debt management programme is set up to make sure that you close your credit account, not the creditors, so that your credit score stays safe.
Major differences between a traditional debt management programme and a specialised one
Even though traditional debt management programmes and specialised debt management programmes have a lot in common, they are also very different in a few important ways. Find out how they are different to decide which plan is best for you:
- You don't have to close all of your open lines of credit.
Once you signed up for a traditional debt management plan, you would have to close all your lines of credit. In a specialised debt management programme, on the other hand, the plan will help you figure out which credit accounts you can or should keep open for business or emergency purposes.
- Extra steps will be taken to protect credit as much as possible.
In a specialised debt management programme, you have to take extra steps to close your accounts before sending in your debt management proposal. This is so that your credit report will show that you closed the accounts instead of your creditors, which will protect your credit rating.
- Sign up for a debt-management plan over the phone.
Before you can sign up for a traditional debt management plan, you usually have to go to an in-person meeting. You can sign up for a special programme to help you manage your debt over the phone.
- Make a daily payment to your creditors.
With a specialised debt management plan, you have to send electronic payments to your creditors every day, instead of just once a week like with a traditional plan. With daily payments and easy electronic transactions, it will be easier to make sure that all payments are made on time.
In conclusion,
People with good credit who need to keep one or more lines of credit for business or personal use are the ones who should use specialised debt management programmes.
