Normal / traditional debt management program is designed for those people who have debts that are exceeded their repayment capability. Traditional debt management normally works hand-in-hand with credit counseling to help the debtors to resolve their debt issues. But there is another specialized debt management program which dedicated for people who have good credit. If you need to maintain one or more lines of credit for business or personal use, specialized debt management program is your option.
A specialized debt management program works more or less like a traditional debt management program; however, there are some extra steps needed to properly close the accounts and to be included in the debt management plan before a proposal is submitted to the credit grantors in order to help protect the consumer's credit rating.
In the traditional debt management plan, many credit grantors will close your accounts and noted a "closed by creditor" on your credit report which will hurt your credit score and cause you harder to get new credit in the future. But if you are the one who close your account, your credit score won't be affect. This is how specialized debt management program is worked out to ensure that your credit account is closed by yourself and not by the creditors, so that your credit ratings will be protected.
Major differences between traditional and specialized debt management program
Although there are many similarities between traditional and specialized debt management programs, but there are a few major differences between these two debt management programs. Identify their difference will help you to determine which plan is right for you:
1. You do not need to close all exiting lines of credit
Under the traditional debt management program, once you enrolled into the plan, you will need to close all your lines of credit. Whereas, in a specialized debt management program, the plan will help you to decide which credit account you can, or should keep open for emergency or business purpose.
2. Extra steps will be taken to minimize credit damage
Under a specialized debt management program, extra steps are involved to close your accounts before submitting the debt management proposal, so that your credit report will indicate the accounts are closed by you instead of your creditors and get your credit ratings protected.
3. Enroll into specialized debt management plan via the phone
Normally, the traditional debt management plan will require you to attend a face-to-face appointment before you can enroll into the plan. In a specialized debt management program, you can complete your enrollment via the phone.
4. Daily Payment To Creditors
A specialized debt management program requires you to make electronic payment in daily basis to your creditors rather than weekly like what is implemented in traditional debt management plan. With daily payment and the easy of using electronic transaction, it will help to ensure that all payments are made before they are due.
In Summary
Specialized debt management programs are geared towards people that have good credit and needs to maintain one or more lines of credit for business or personal use.
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