Financial Planning vs. Debt Consolidation

Pennsylvania Consumer Credit Attorney | New Jersey Lawyer

If you are experiencing a financial crisis that you can no longer handle alone, Pennsylvania consumer credit attorney John M. Kenney can help you find relief. He has been providing successful debt solutions for his clients since 1983, and has the experience needed to help you climb out of what may seem like a hopeless situation.

Although debt consolidation and bankruptcy are appropriate solutions in some cases, a realistic debt management plan often proves to be a better alternative. Paying off your debts individually instead of signing up for debt consolidation services will keep "settled for less than amount owed" strikes off of your credit report. Making consistent payments on your individual debts will also allow you to repair your credit score more quickly than if you filed for bankruptcy.

How a Debt Management Plan Works

The principle behind a debt management plan is accountability. Unlike with bankruptcy and debt consolidation, your creditors will recover the entire amount you owe; it will just be over a longer period of time and (hopefully) at lower interest rates. You will need to take the following steps in order to secure a debt management plan with your lenders:

  • Determine what you can afford to pay your lenders every month
  • Contact each of your creditors and declare your intention to pay off your debt
  • Ask them to reduce the interest rate on your account
  • Commit to the exact amount you will send each month, which will be the same for all creditors
  • Don't skip any payments and always make them on time

At first your creditors may refuse to negotiate (especially if your account has been turned over to a collection agency). This is where a skilled financial planning attorney can step in. New Jersey lawyer John M. Kenney has extensive knowledge of credit laws and financial planning solutions and will use this knowledge to conduct aggressive debt negotiations on your behalf.

Financial Planning vs. Debt Consolidation

Debt consolidation can look very appealing if you are overwhelmed with past-due credit card bills. Instead of accumulating late fees and interest on each of your separate accounts, debt consolidation companies combine all of them into one and take over the monthly payments for you. In return, you agree to send them a lump sum every month, which includes fees and interest added by the debt consolidation company.

Unlike debt management plans, debt consolidation services come with many risks. Because the companies that offer these services are profit-driven, they frequently charge fees and high interest rates that can significantly lengthen the amount of time it takes you to pay off your debt. Some debt consolidation companies will even ask you to take out a second mortgage on your home as a means of covering your monthly payments. This will not only increase your overall debt, but can put you at risk of losing your home.

Consumer credit attorney John M. Kenney is familiar with the pros and cons of debt consolidation and can advise you on whether or not it is the best solution for you. Mr. Kenney offers free consultations during which he will take the time to answer all of your debt reduction questions. For a free consultation, please call (215) 547-3031, email, or fill out and submit our online "Contact Us" form.