How does debt management work?
This is how credit counseling works: A reputable credit counseling service will examine your debts and your income and come up with a budget. Based on that budget, the counselor (in consultation with your credit0rs) will devise a repayment plan. In turn, you will pay your credit counseling agency once a month, and the agency will distribute the money to your creditors, keeping a small percentage for the agency. Your credit counselor will probably be able to get some concessions from your creditors, such as waiving interest fees and late payments, lowering the minimum monthly payments, and the opportunity to reinstate your credit if you complete the debt management process. Debt management is actually rather similar to filing for Chapter 13, only it doesn’t appear on your credit report, and stay for 10 years thereafter. However, unlike Chapter 13, if you miss a payment, your debt counselor can cancel the plan, and your debt counselor cannot discharge any of your debts; instead, all your unsecured debts will have to be paid back fully.