Debt management programs are the solution for those who are up to their eyeballs in debt, yet have no way of obtaining a debt consolidation loan.  Maybe you have tried to apply for a home equity loan or line of credit and you have been denied.  Maybe you have visited your local bank and were denied a personal loan there.  You might have even tried to get another credit card in hopes of consolidating some of your higher interest rate credit card debt on this new card, but either you were denied the new card or the limit was too low to really make a dent in your credit cards debt.  Whatever the case may be, your last resort may be a debt management program, yet is this really your best option?

Here is an overview of debt management programs, the way they operate, what you can expect, and what you cannot not expect.  It is up to you to decide if they are your best option!

• If you are considering a debt management program, you probably already know that you have more debt than you can handle.  Yet, do you know exactly how much debt you do have?  Do you know what the interest rates are?  Do you know how much money you pay to each creditor every month?  Until you have all this information, a debt management company will not be able to work with you. It is a good idea to save all your bills for two months, after you pay them, so that you can keep track.
• If you find that many of your expenditures are not in interest rates to credit card companies, but perhaps you are paying down interest free or very low interest medical bills, a debt management program might not be a good option.  If, for example, the interest on your medical bills overall is about five percent, it is unlikely that it can get any lower or that you can save any more money on it, even if they were reduced by one percent. In this case, it might be more advantageous to talk to your doctor and have her or him help you deal with his billing office to accept a payment plan that you can afford.  Many doctors will be happy to do so, especially if you have an established relationship with that office.
• In the same vein, if your debts are the result of numerous personal loans, such as perhaps to a small loan company or even a manufacturer in order to purchase a computer, you need to be aware that some of them will not negotiate with debt management companies at all.  You will still have to pay what you agreed to pay originally. 
• On the other hand, if the majority of your debt stems from high interest credit cards, you will most likely benefit from a debt management program, but only if you have already done your homework!  Did you know that the biggest help these companies offer consumers is the fact that they will call the creditors and attempt to negotiate lower interest rates with them?  Did you know that you could do this yourself?  You might not always be successful, but it never hurts to ask! Until you have tried to negotiate with your creditor yourself, these companies may not be a good option.
• On the other hand, if your debt has spiraled out of control to the point of daily phone calls from collections agencies, creditors, and others who are trying to get you to send money overnight, then it is probably high time that your contact a debt management company.  They will be able to make these calls stop virtually overnight.

As you can see, there are several things to consider before signing up with a debt management company.  Additionally, there are a number of things you can try on your own first.  While it is nice to have only one monthly payment to make to the company, they will take your funds and disburse them to your creditors on a monthly basis, you also need to be aware of the downsides: you will probably no longer have access to your credit accounts, so if you need them to get by every month, you will be left hanging; additionally, while you may be able to have your accounts re-aged on the credit report, you will probably also see a notation that states that you renegotiated the terms of the agreement and this is a red flag to future creditors. Think long and hard before signing up with a debt management company and only do so after exhausting all your other options!