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First, it can be difficult to complete a debt management program. You’ll lose a large measure of financial freedom — most programs will require you to close all of your credit accounts and refrain from opening new ones. You may be allowed to keep one creditor outside of your debt management plan for emergencies, but if you abuse the privilege, you’ll just dig a deeper hole of debt.
If you're not able to secure a lower interest rate from your current credit card company, you may be able to transfer outstanding credit card balances to a card with a lower or zero interest rate (called a balance transfer credit card). Credit card companies often offer promotional rates for a limited period in exchange for you transferring a balance from an existing card to a new one. You'll need to meet the balance transfer card company's qualifications, and will probably need to pay a transfer fee that equals about 3 percent of the balance you're transferring.
Not all forms of credit are actively bad, and many folks are able to use debt as a responsible means of augmenting their purchasing power. When you're dealing with a million competing priorities, however, it can be tough to keep your finances straight. If your expenses are rising faster than your income, you can only keep up this dance for so long.

Debt settlement. Debt settlement programs typically are offered by for-profit companies, and involve them negotiating with your creditors to allow you to pay a "settlement" to resolve your debt — a lump sum that is less than the full amount that you owe. To make that lump sum payment, the program asks that you set aside a specific amount of money every month in savings. Debt settlement companies usually ask that you transfer this amount every month into an escrow-like account to accumulate enough savings to pay off any settlement that is eventually reached. Further, these programs often encourage or instruct their clients to stop making any monthly payments to their creditors.


Another option is consolidating your debts into one manageable account. The main purpose of this is to eliminate the higher interest rate debts, arrive at lower monthly payments and allow you to concentrate on making just one payment. However, this does nothing to your total balance. What you will be doing is shifting all of your debts into just one account.
Bankruptcy is a last-ditch attempt to settle debts. It is a legal proceeding through which you liquidate all assets in order to wipe out debt (Chapter 7) or persuade creditors to approve a repayment plan over a 3-to-5 year time frame to eliminate debt. There are severe consequences for both, including a drop of as much as 200 points in your credit score and the bankruptcy action remaining on your credit report for 7-to-10 years. A debt management program is not a legal proceeding. A notation that you are in a DMP could appear on your credit report, but there should be little impact on your credit score until you complete the program. At that time, you could expect your credit score to improve, sometimes dramatically.
The debt management program itself is not reported to credit bureaus and does not factor into credit scores. The largest % of anyone’s credit score is payment history and with a debt management program, our goal is to make on time payments to liquidate your debt in a reasonable amount of time. Initially, your score may dip when lines of credit are closed, however, people on a debt management program typically see their scores increase over time as they make on-time payments each month.
Hybrid loan option: CommonBond offers a unique “Hybrid” rate option in which rates are fixed for five years and then become variable for five years. This option can be a good choice for borrowers who intend to make extra payments and plan on paying off their student loans within the first five years. If you can a better interest rate on the Hybrid loan than the Fixed-rate option, you may end up paying less over the life of the loan.

Visitors to Credit.com are also able to register for a free Credit.com account, which gives them access to a tool called The Credit Report Card. This tool provides users with two free credit scores and a breakdown of the information in their Experian credit report, updated twice monthly. Again, this tool is entirely free, and we mention that frequently in our articles, because we think that it’s a good thing for users to have access to data like this. Separate from its educational value, there is also a business angle to the Credit Report Card. Registered users can be matched with products and services for which they are most likely to qualify. In other words, if you register and you find that your credit is less than stellar, Credit.com won’t recommend a high-end platinum credit card that requires an excellent credit score You’d likely get rejected, and that’s no good for you or Credit.com. You’d be no closer to getting a product you need, there’d be a wasted inquiry on your credit report, and Credit.com wouldn’t get paid. These are essentially what are commonly referred to as "targeted ads" in the world of the Internet. Despite all of this, however, even if you never apply for any product, the Credit Report Card will remain free, and none of this will impact how the editorial team reports on credit and credit scores.


I have been debating about Freedom Debt Relief, they seem like very good people but my question comes from that I am worried about my Credit Score. Here goes I have about 7-8,000 in credit card debt eventhough its not that much I have been laid off and have been looking for work for the past year trying to have been using my savings to pay off my credit. I am finding myself not struggling to do this longer but am in a delima that I have to get a place in the future and will not qualify to Rent. How long does it stay on your credit do agencies like Lexington Law Firm are good option in rebuilding it faster?

A debt-settlement firm is typically a private company that works to settle your debt with a creditor. They may charge fees upfront and promise to help you pay off debt. Beware of debt settlement companies, and if you’re unsure of the difference between a debt settlement company and credit counselor, review this chart by the Consumer Financial Protection Bureau.
Chapter 7 bankruptcy allows you to discharge most debts, which means the debt disappears after bankruptcy proceedings. But there are strict income limits to be eligible -- generally your income must be below the median in your state -- and you might have to turn over some of assets to be sold so proceeds can be used to repay creditors. Your house, a very low-value automobile, and tools used for business are usually exempt from being sold. 
Finally, you should know there’s a chance your credit can still suffer. Technically, entering a debt management plan shouldn’t hurt your credit score. But if your debt management company ever misses a payment on your behalf, your score will take a hit. Also, prospective lenders may shy away from making loans if they see a notation on your credit report that you’re in a debt management program.
The convenient answer is: When your debt is so small that you can handle it yourself by doing a better job of budgeting; or when your debt is so large that there isn’t enough income to pay for basic living needs AND make a payment toward your debt. The truth is that everyone’s circumstances are so different that an interview with a credit counselor is the only way to know whether you qualify for a DMP.
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