The Meaning of Debt Management
We can manage our money by creating budgets and setting financial goals. Managing our debt is also important. It becomes difficult to keep up with your bills when you have multiple debts. Using budgeting and financial planning to get your unmanaged debt under control is called debt management. Using these strategies to help you lower your current debt and move toward eliminating it completely is the goal of a debt management plan. You can go through credit counseling or you can create a debt management plan for yourself to help you with your plan. You can find credit counseling organizations that are both nonprofit and for-profit. These organizations operate with the same goal but in different ways; they both want to help people manage any new debt they may create by coming up with a budget to pay off their debts.
To help consumers get control over their unmanaged debts, a credit counseling agency initiates a repayment plan as debt management. Unsecured debt like medical bills and credit card debts are mainly what a debt management plan covers. Any secured debt, such as car loans and mortgages, is not included. Start New Financial has trained financial counselors who can tell you whether or not a debt management plan is right for you after taking a comprehensive look at all your finances.
Advantages of a Debt Management Plan:
With the assistance of debt management services, you only need to make one monthly payment to your credit counseling agency. The payments are then made to the creditors on your behalf by the credit counseling agency.? You can take it easy for the rest of the month once you make the one monthly payment to your credit counseling agency on time, without ever again having to worry about late fees or juggling a complicated payment calendar. If you struggle to keep track of due dates because you have a lot of accounts, debt management becomes especially useful. It is easier to stay consistent and reduce your debt quickly with a debt management plan.
Your credit counselor always tries to negotiate lower interest rates on your behalf, and your monthly payments are lowered too by lower interest rates. More of your payment can be applied to the principal balance and you save money on payments with a lower interest rate. So it should help you pay off your debt even faster. Most people with a debt management plan pay their debts within three to five years with lower interest rates and negotiated terms. On average, clients on a debt management plan see their scores increase by 62 points after 2 years.
Disadvantages of a Debt Management Plan:
A debt management plan might not be the best option if one or more of your creditors refuses to participate in it, which rarely happens. Not all creditors participate in debt management plans, though most do. The creditor is who ultimately determines the benefits and conditions, even though, to secure the best terms, your credit counseling agency will negotiate on your behalf. To ensure that you are not taking on more debt while you pay back your current balance, a debt management program makes you close all the credit cards that are included in your debt management plan. You?re even advised against using credit cards that aren’t included in your debt management plan, except in case of emergency. It also makes sure that it is for their intended purpose that you are using the debt management plan perks such as your lower interest rate. You must make consistent monthly payments in order to keep the benefits of your debt management plan such as smaller monthly payments, lower interest rate and more. You can very well lose your benefits if you don?t. People who plan to uphold their end of the agreement and are committed to financial change are who debt management plans work best for. Your spending can be monitored by the creditors involved in your debt management plan. They might ask you to close the account If they notice new debt.
CALL START NEW FINANCIAL TODAY TO SPEAK WITH? A CERTIFIED DEBT SPECIALIST
?Start New Financial helps you stay more organized and punctual with your monthly payment for your debt with the realistic and affordable plan we individualize just for you. We truly care, so we also educate you on how to successfully manage your debts, pay them, and stay debt-free for good.
Get A Free Debt Assessment
Simply fill out the form and one of our credit counseling experts will contact you. Soon, you’ll be on your way to a debt-free life!