Recent reports in the financial media contend that consumer spending has changed dramatically in the past few years. Before the housing bubble burst, loans and credit were easy to come by and Americans were taking on new debt at a furious pace. But ever since the housing market began its free fall and the recession took hold, consumers have generally focused on saving and trying to pay down the debt they accumulated. For many, though, the combination of high interest rates, the size of their debt and a loss of income have made repayment all but impossible.

High mortgage payments on homes that are now “upside down” in value is certainly a major debt issue, but it may well be that unsecured debt (such as credit card debt and personal loans) is just as serious. With interest rates as high as 29.99% on credit cards, the combined monthly payments can many times approach or even exceed the size of the mortgage payment for many borrowers. In contrast, so-called “predatory” lending very seldom resulted in first mortgage interest rates in excess of even 10%.

This set of circumstances has caused millions of consumers to actively seek a solution to their unsecured debt problems. Many of these selfsame borrowers are also making just minimum monthly payments on their accounts, the end result of which is a protracted repayment period. A debt management plan (DMP) through a credit counseling agency is a debt solution that may be exactly what’s needed to deal with these problems.

The principal advantage of credit counseling, the counseling aside, is that interest rate relief can be realized on the unsecured debt by enrolling in a DMP. Consumers can expect that if their interest rates are high when they enter a DMP, then they should see some creditors drop their rates significantly while others may even eliminate interest charges altogether. By realizing these savings the payoff time frame will shrink to just 3 to 5 years.

Another benefit of DMP’s is that late and over-limit fees become a thing of the past. This undoubtedly contributes to the abbreviated repayment terms as well. Accounts are also re-aged to “current” status by the creditors for credit reporting purposes.

For consumers who are overwhelmed by the organization skills required for the multiple accounts they have, they will appreciate the consolidated monthly payment that a DMP offers. It can become a very tedious task to stay abreast of all the separate payments and due dates with all the other demands that life can throw at us. So making just a single monthly payment will be a welcome change for many.

Another concern for many consumers struggling with their debt is the collection phone calls that can become a nuisance for some and a nightmare for others. Since the companies that offer DMP’s have close relationships with creditors, they can be very effective at bringing an end to these calls. Just be aware that DMP’s aren’t tolerant of late payments, and that the collection calls will surely resume if you drop out of the program.

Consumers’ credit scores will be safeguarded while they are in a DMP. Their enrollment is not a factor that is considered in computing the credit score, according to the Fair Isaac Corporation (FICO). Notations however will be made that the consumer is working with a debt relief company’s DMP on the accounts that are enrolled.

Author excerpt: Jackson Roberts is an experienced debt analyst and has been helping consumers eliminate credit card debt for over 12 years. He hopes to educate indebted consumers about the many credit card debt solutions available.