There are many stresses in a person’s everyday life. One of the biggest stresses that the average person has is debt. It can be overwhelming and sometimes feel like there’s no way out. In order to stay out of debt one should pay all their bills on time, while trying to pay them off to remove the debt. This isn’t always the option that we have available to us at the time. There is one way that a person can try to handle their debt when all else seems to have failed, that is through a debt management plan.
What
A debt management plan is a program designed to help an individual get out of debt in a way different than they are current trying. A debt management plan is similar to a budget, however it is designed to pay your debts off as well as increase your credit score.
There are many services offered by a debt management company to help you reduce or remove your debt. These services commonly include an introductory financial counseling session as well as negotiation with your creditors. The company will negotiate on your behalf trying to reduce the amount of your debt or how much interest you owe.
Who and When
It is important to know who can be eligible for a debt management plan as well as when it is the right time to find one. Any person with unsecured debts is eligible to create a debt management plan. Unsecured debts are credit card debt, payday loans, medical bills, personal loans, or consumer credit can qualify to enter a debt management plan.
When is the right time to find debt management help? This is a question that can only be answered by you. If you answer yes to any of the following questions you might want to look into receiving help through a debt management plan.
- Do you have high interest rates?
- Having trouble managing your current bills?
- Have you failed in other debt management options?
- Are you looking into filing for bankruptcy?
- Do you receive phone calls from creditors?
Knowing that there are options might be a relief to anyone. Determine if you can be helped and then go search out help from a debt management plan.
Benefits
There are many benefits that exist when using a debt management plan. One thing that is benefited is that your credit won’t be harmed. Unlike many other debt solutions this plan is designed to improve your credit not harm it. There will be no penalty for using a debt management plan to your credit score.
There are many other benefits that can be accounted for in a debt management plan.
- You are able to put all the stress of doing it alone away, as you will have the help of a professional.
- Lowering the debt, interest, and penalties of your current creditors
- You will only have one monthly payment rather than one for each creditor.
- Getting out of debt faster and improving a person’s credit score
- No longer have to worry about bankruptcy
With all these benefits it is hard to see why one would not chose a debt management plan from the beginning.
Choosing a Plan
Once you have decided that a debt management plan is the way to help you it is important to pick the right program.
- Be sure that the plan you chose is within your budget. Don’t agree to something you can’t afford, you could set yourself up to fail. Be sure to limit your monthly payments any not put yourself into more debt than you started off with. Be sure to make all payments on time, defaulting can cause more trouble then you started with. Making payments on time and within regular expectations can help to increase your credit score.
- Gain approval, when you are making any changes you need to be sure that everything gets signed and documented properly. Avoid verbal agreements, getting everything documented properly can make following the debt management plan much easier in the long run.
- Ensure that you have gotten the creditors approval for any changes that you are making, even when beginning the process of obtaining a debt management plan. Your plan needs to be approved by not only you but your creditors as well.
- Watch out for the fees from the debt management company. Some companies charge high fees. Others charge fees for enrollment, application, as well as for talking to a counselor.
Be sure to pick the best company and plan for you and your needs. Never let someone pressure you into a decision that can potentially harm your financial status. Enjoy the feeling of taking back your financial future with a debt management plan.