Nowadays, many consumer credit counseling companies are offering debt management plans to help people get out of debt. Debt management is regarded as one of the most popular debt solutions since it doesn’t necessitate taking out a new loan. There are other debt solutions like bankruptcy, bill consolidation and debt settlement but more and more people are resorting to debt management as they find it more convenient.
Some interesting facts about debt management
Under a debt management plan (DMP), all your unsecured bills including credit cards are rolled into one affordable payment that you need to make to the debt management agency each month. They would subsequently distribute this payment among your creditors. In this way, you can pay off all your bills within 2-3 years.
If you sign up for a DMP, you can come out of your debt trap faster than if you would have tried it on your own. The reason behind this is the credit counseling agency negotiates on your behalf with your creditors to lower your interest rates and waive your late fees and over limit fees. This helps you get a reduced monthly payment and save money.
Following negotiation with your creditors, a payment plan is set up by thoroughly evaluating your budget. The amount of monthly payment is decided in such a way so that you don’t face any difficulties to pay it on time.
The success rate of credit counseling agencies in making people debt free is quite high since they have associations with many creditors all over the country. Countless people have achieved financial independence with their help.
However, you should also keep in mind that if you want your DMP to be successful, you have to stop using your credit cards altogether. If you can’t do it, your financial problems would continue to remain the same.
DMPs are ideal debt solutions for those who’re lagging behind on their monthly payments. You can pay off all your dues entirely along with interest and this is beneficial for your credit score.
Advantages of a DMP
Given below are the benefits offered by a DMP:
You can stop embarrassing calls from creditors and collection agencies
You can lower your interest rates considerably
Rather than making multiple payments to your creditors, you just need to make one payment each month
If you make regular payments for your DMP, then your overdue accounts would be brought to current status
You can waive over limit fees and late fees
You can simplify your budget
Going through the above details would help you understand why debt management is becoming more popular.
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