What Should you Know about Debt Management Plans?
Are you looking for a way to cope with your enormous debt? Well, debt advisory center might offer you some relief. Their debt advice line can help you get back on track Debt management plans help you get back on track, but they can also be unnecessary and even detrimental when managed properly or done for wrong reasons.
Therefore, we have come up with what you must know about consolidating your debts with the help of a debt management plan-
Debt Consolidation is a Third-Party Payment System
Fed of juggling many different accounts? Well, with a debt management plan, you make one payment to the credit counseling agency, which further distributes the money to your creditors until they are paid in full. These agencies possess preset arrangements with most financial institutions, many of which provide lower interest rates and fees, so a considerable part of your payment goes toward the balance instead of finance charges.
Agencies vary in Quality
With something as valuable as your finances, one has to be increasingly careful about who you work with. Make sure the agency you choose should be organized, send payments and statements on time and offer strong consumer education and support. And if you think it falls short, contact another branch right away.
Consolidation is not Right for Everyone
How do you know whether a particular debt management plan will work in your favor? Firstly, the bulk of your balances should be in unsecured debts, like credit cards, personal loans and sometimes, collection accounts.
If most of your liabilities include tax debt, parking tickets or unpaid child support; these debt management plans won’t help. And secondly, you should be well-confident about your payment for not only a month or so, but for years to come.
It’s Easy, Steady and Efficacious
While you are on a debt management plan, your payment will tend to remain constant. You no longer have to worry about how much you should be paying every month, as it will be the same amount until all creditors are satisfied.
When one account is satisfied, the others receive a larger part of your payment, which further speeds up the repayment process.
No Charging until it’s Over
When stepping into a debt management plan, you need to make one of the agreements that you will close your credit card accounts and not getting any new account opened until you are completely debt-free. Well, this could prove to be a mighty adjustment if you are completely used to whipping out the plastic on a daily basis. And, in all aspects, it does make sense.
Your Work is Crucial
Those you owe money will still be sending you account statements, which you will have to analyze and send in. Remember, the reports from the agency do not depict the interest that you are still being charged, so if you don’t pay them, the balance agency reports will be very different from what your bank statements say. So instead you find hole for thousands, make sure you do your job perfectly.
Clearly, consolidating your debts with the help of a debt management plan together with debt advice line can be helpful, but you might also be able to achieve the same results on your own. But how? Stop using your credit cards and request reduction in interest rates from each of your creditors. And if they turn down your request, make a few large than average payments initially and then try again. And finally, adapt a living within your mean and prepare for your life’s inevitable financial emergencies.