Understanding Debt Management and Its Impact on Your Credit
Debt management is a popular debt relief option, but it’s important to understand its impact on your credit. Our Kansas City Bankruptcy Attorneys at Walden Legal Solutions can help you explore your options.
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The Role of Debt Management Companies:
- A debt management company can assist in creating a budget and negotiating with creditors. However, if advised to stop payments, it can harm your credit score. Negative accounts will be reported for 7 years, impacting your credit report.
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Choosing the Right Debt Management Company:
- Reputable non-profit companies help ensure you don’t miss payments. They take over payments immediately, keeping accounts current. Check the List of Approved Registered Credit Services Organizations for Kansas or the National Foundation of Credit Counseling for Missouri.
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Impact on Credit Scores:
- Settling accounts can lower credit scores, but the impact may be less severe than a bankruptcy filing. Accounts marked as “paid through DMP” indicate debt managed through a plan, not as originally agreed.
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Potential Downsides:
- Closing accounts during debt repayment can negate the benefits of demonstrating credit management. It’s crucial to consider these factors when evaluating debt management options.
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Conclusion:
- If it sounds too good to be true, it probably is. Contact us for a free bankruptcy consultation to determine if bankruptcy is the right option for your financial situation.