You did not plan for it, but somehow, you managed to financially bury yourself almost six feet under. Maybe it was your credit cards, medical bills, school loans or personal loans that shoved you into this financial hole. While you still can, make good use of the little oxygen supply left down there by arranging, or at least, by asking a credit consultant to formulate for you, an effective debt management plan.
What Is A Debt Management Plan?
A debt management plan is another term for debt management program. It is an arrangement between you, as the debtor, and your creditors to set a scheduled monthly payment under terms that are acceptable to you and to them. These scheduled payments are worked out according to your financial capacity to pay. In several cases, a debt consolidation is recommended, where a new loan is obtained to pay off the several loans. A lower interest rate must be negotiated to make it more affordable to the debtor.
Debt management counselors or companies often handle these plans. They negotiate and manage the payments on your behalf. Of course, they charge for their services, so set aside budget for this. Otherwise, formulate the debt management plan yourself and face your creditors.
Debt Management Plan Specialists – To Hire Or Not To Hire
Time, knowledge, confidence, negotiating skills and discipline. If you are endowed with the resources and capabilities mentioned, then you could possibly pull off a good debt management plan. You need time to analyze your sorry financial state of affairs, come up with a good program and negotiate and follow up creditors. You will be sending the payments to each of your creditors yourself. You need to research and learn how to come up with a good debt management plan. You need to confidently face and bargain with creditors so that the program also works very well for you. You need to study how and discipline yourself on changing your patterns of spending so that you do not continue to get buried deeper in debt.
Whew! That was quite a long list. If you hire a specialist, you get to delegate all the tasks to be done and you can instead make use of your time looking for more ways to add to your current income.
Besides helping you draw up and negotiate a debt management plan, the services of a credit counselor or company can include budget counseling, savings and debt management classes, distributing payments to the creditors, among others. Imagine the relief of passing on such things to do and the helpfulness of learning how to properly manage your finances.
The drawback of employing a consultant though is the fee they charge. Choose one that offers a reasonable rate. You can use this drawback to your advantage by thinking of the fee you have to pay them each time your hand itches to swipe your credit cards. Think about the money you throw away if you do not adhere to the money management advise they give you or comply with making the newly-set payments.