Debt management plans are among the most best-selling debt elimination alternatives, this doesn’t necessarily imply they’re the most beneficial choice for your particular situation. The companies that provide these types plans are consumer credit advising services and they are available in Varity and quality.
When you first make contact with the advising office, they should at the start supply you with a counseling session to analyze your fiscal situation and, if necessary, suggest an Debt Management Plan. If your happy and agree to sign on, they’ll attempt to stop late fees and negotiate a lower rate of interest with all your current creditors. You’ll pay them a monthly payment and they’ll split up that payment to your creditors and make your monthly payments. Even so, as with any debt reduction plan, these programs have their own pros and cons.
The Pro’s of Debt Management Plans…
>>>Your monthly payments remain the same…Unless yourself or the counseling company miss or make your payment late, you do not have to be concerned about your payment increasing.
>>>It will be necessary to close your credit card accounts… It’s mandatory to stop using any credit cards. You may not see this as a good thing, but it’s certainly beneficial and it does make good sense.
>>>A few of your creditors might be able to stop late fees and give you the lower interest rate.
>>>You won’t have the inconvenience of paying a whole bunch of bills monthly. While its extremely crucial that you go over your balances in your statements monthly.
The Con’s of Debt Management Plans…
>>>These plans are not for everyone. These type of programs are mainly for the consumer who has sufficient regular income each month to pay their debt management plan and pay for other monthly expenses…without having to use credit cards! It’s to your advantage to setup a savings account for emergencies.
>>>Very inflexible re-payment schedule…You’re not able to miss a monthly payment or pay less monthly. Even if you have an fiscal emergency. Consequently these type of programs have a very high failure rate.
>>>Your credit rating could be affected…Although these companies will not report this to the credit agencies, there’s not any way to prevent your creditors from reporting that your making monthly payments by a debt managing plan.
>>>These plans are for unsecured debts only…If you owe money for taxes, alimony, or child support, automobile, house mortgage or any other secured debts this type of plan cannot help.
>>> Fraud…While most of these companies are genuine and really want to help the consumer, there are many that are misleading and dishonest.
>>>A few companies make late payments, consequently your account could get charged with late fees and a higher rate of interest .
>>>You need to do your research and ask them a lot of questions… Try to get some references from them. All this work will be worth it if you believe a debt management plan is right for you.
These are the most important pros and cons of these type of plans. It’s critical that you do your own research and be well informed prior to signing up for a Debt Management Plan. All the same, you can certainly make your own plan. All you’ll need is a system, a lot of discipline and determination, and for a small fraction of what you’d pay a counseling agency you will be able to buy a do it yourself debt reduction system.
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