Considering today’s economy and high personal debt rate, unmanageable debt is becoming commonplace. Along with high personal debt rate, there are also just as many solutions out there for individuals to manage their debt and become debt free. While there are several debt management solutions out there- consider a debt management program as a primary step towards paying off your debt.
Why Subscribe To A Debt Management Program?
A debt management program is actually a plan, a flowchart of sorts- a personalized path set out for you by a professional debt counsellor to get you debt free. The basic aim of the program is to consolidate all your several debts into one neat package so it causes you less stress and you can systematically pay off your debt. Here are a few reasons why this is going to be a really good idea if you are in debt:
- A credit counsellor will talk to all your creditors making arrangements to consolidate your high interest debt. This saves you a lot of work and gets you the best possible bargainer on your side.
- You are down to just one payment a month. This program sets up payments for you from your bank account and ensures you remain on track with the plan set out for you.
- Your counsellor can often also be your mentor offering personal financial advice on how to stay out of debt like creating a budget or making disciplined savings.
- Most of these programs are non-profit and are usually working for you.
- Your debt management program will keep your information confidential and make sure your creditors are paid on time. This allows you not only to make sure your creditors are paid, but also take payments directly from your account so you only have so much money to spend.
- Many non-profit programs are free or available at low cost to you. This really helps if you are already in debt.
While debt management is obviously your priority, consider choosing the right program for you if you choose to subscribe to a debt management program.
What Can They Offer Me For My Debt Consolidation?
There are a few different kinds of debt management programs you can seek out. Each has its own benefits and downfalls, but it is important to find one that fits your needs. For example, if your overdue debt is low, you really don’t need a long term debt consolidation loan choose a short duration loan that can get you debt free quicker. Here are some of the options we found out there:
Debt Management Counselling:
In subscribing to this program, you can be assured that you will have to do none of the work except come up with payments. Counsellors negotiate on your behalf to reduce your interest rate. The catch is that this is only a viable option if you are in low to moderate debt. If you have really high debt amounts and not enough income or collateral to pay it off, this may not be the right option for you.
If your debt has been overdue for a while, debt settlement may be the way to go. Interest rates add up for every payment cycle you go without making payments and with debt settlement you can actually lower the amount you owe to your debtors. While this option has had a lot of success with individuals in debt, it also has a highly negative effect on your credit history.
Debt Consolidation Loan:
For this option to work, you have to be able to put up some collateral or be in a good enough job to pay off with every paycheck. This brings all your several loans to one loan and the interest for this loan is often tax deductible. This option, though, is only best for those with low debt amounts and at least a little creditworthy.
Self Debt Management:
While managing your own debt is free, there is a certain amount of discipline involved here. You have to build your own debt management plan with a personal financial plan. Building budgets, negotiating with debtors and making payments will all be up to you. This has seldom worked as individuals cannot be a 100% disciplined all the time and it can be quite hard to do all the work without having a professional backing you up.
Of course, there are some bad debt management programs out there just are good ones. Pay attention to the program you choose- consider the fees charged and their Better Business Bureau rating (if available). Ask around and make sure the program you choose is legitimate and is working for you. With the right program, you can get the best advice and the best deal on your debt consolidation.