Accelerated Debt Consolidation, Inc. Offers Guidance on Various Debt Management Services. New Services Offered Vary In Results And Suitability

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Learn the differences between debt services and choose the correct service by following this tip sheet.

Be Sure to Choose the Correct Debt Management Service

Credit consumers needing debt relief are now faced with different offers from different types of debt services and it is sometimes confusing to determine which service is the right one. There are basically four types of debt services that are different in what is offered and the outcome of going through with them. For consumers facing severe reductions in income, long past due delinquencies and an inability to pay the required minimum payments, bankruptcy may be the correct route to solve the problem. There are different types of bankruptcy such as Chapter 7 which relieves the debtor of the amounts owed to accounts that are included in the Chapter 7 entirely and Chapter 13 which is a repayment plan through the court. Consumers faced with this serious of a debt problem need to understand that bankruptcy will adversely affect their credit rating and should be considered only after exploring viable ways to get their debt paid in full. If it is determined that bankruptcy is the best route, consultation with an attorney is necessary.

Over the last 10 years, “debt settlement” firms have sprung up all over the country and much caution must be used if a consumer chooses this route for solving the debt problem. Debt settlement firms structure a monthly payment plan with the client and work to “settle” the outstanding balances for less than the full balances owed. Whenever this route is taken, damage to the credit score is inevitable. In order to maintain and improve credit scores, accounts must be paid in full, through debt settlement accounts will not be paid in full. Debt settlement can be a viable option for consumers that are severely delinquent and totally unable to pay required minimum payments. Settling debts for less than the full balances owed can also be handled by the consumer without paying a settlement firm to handle this process for them (click here for info on settling debts).

For consumers that can still pay the minimum payments or may be delinquent by just a few months, debt management and credit counseling may be the best choice and there are different types of these services available. For consumers that need to maintain some credit cards for emergencies, travel and business, a “specialized” debt management service is needed (click here for info on specialized debt management). There are also “traditional” credit counseling firms that are funded by creditors that usually advertise as “nonprofit” that offer debt management plans. Many of these firms require all accounts to be included in the debt management plan and also may require a signed agreement stating that the client cannot open any new lines of credit while enrolled in the debt management plan.

Here are some tips on choosing the correct service:
1.    Understand that bankruptcy will result in long-term damage to the credit score.
2.    If bankruptcy turns out to be the best option, find an attorney that offers free initial consultations and check the attorneys record with the Bar Association and Better Business Bureau.
3.    If the credit score is already damaged and accounts are severely delinquent with no possibility of maintaining the required minimum payments, debt management and settlement is viable. Choose the settlement firm carefully and check the firm's BBB Rating.
4.    If choosing debt settlement, beware of up front fees; fees should not be charged until debts are settled. Also be sure fees do not significantly reduce the savings.
5.    If debt settlement turns out to be the right choice, explore handling the settlement process without paying a firm to do it.
6.    If minimum payments are affordable through a debt management plan, choose the correct service that will allow for maintaining some accounts for continued use.
7.    Always check BBB Reports for any and all services that are considered before choosing one.
8.    Read all client agreements or contracts thoroughly before committing to any service. Click here for cautions.

For more information on Specialized Debt Management Services, visit or call 800-810-5250.

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Jim Young
Accelerated Debt Consolidation, Inc.
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