If you have multiple debts and are facing difficulties in managing their payments, participate in a plan of debt management. What is it?
A plan of debt management is a way to manage and repay their debt. A plan of debt management to a third party (the organization of debt counseling) manages payments to deal with your creditors. The debt counselor organizes its revenue budget and distribution of monthly payments to creditors. Lenders usually ask for a review of the debtor’s situation regularly to ensure that debts can be paid monthly. A debt management plan also provides support and advices to debtors.
So this plan seems to be a wonderful help for debtors. However, it has both good and bad sides. What are the advantages of a debt management plan?
– Interest rates are generally low, which means you pay less each month.
– The loan lenders you pay goes to the management company debt, the lenders contacts and then distribute the money to them.
– Your creditors stop their bothering calls, you do not have to meet them or negotiate with them. So, you save time and nerves.
– You can remain anonymous in an organization of debt management.
– Late payments affect your credit score and that can take seven years to recover with a management plan that do not have these problems and recalled his time to pay.
A debt management plan also has several disadvantages:
– Some organizations ask high fees for their services.
– Many organizations of such kind of plans also charge a fee for the distribution of money to creditors.
– Also you can not pay the debts secured by a management plan (such as mortgage), but only for unsecured loans, payday loans, credit card debt and personal overdrafts.
If your debt is high and monthly payment is low, you should spend a lot of time covering the present debts. And also have to pay fees for the program, but considering the fact that the debt management plan fix everything and save time, worth taking a chance, especially if rates are low for the plan.