Some forms of debt effectively build wealth and financial health, such as home loans and mortgages, but these bills can chip away at your financial freedom if not appropriately managed. If you find yourself juggling too many bills, then you might need an expert such as a credit counselor to get you back on track.
Credit counseling organizations have the expertise to provide you with bespoke debt management plans (DMPs). These are solutions that can help those struggling with unsecured loans, such as credit card debts. A DMP may be effective in lower your interest rates or monthly payments, which will ease your burden and make debt payments more manageable. DMP is something you should consider if you want to avoid defaulting on your payments or declaring bankruptcy. But before you embark on this journey, you must understand how the process works and benefit from it.
Debt management or repayment plan is set up and managed by a credit counseling company. These organizations offer education and assistance to people to help them manage their finances.
After reviewing your financial situation, the counselor will help you understand your options; he will also negotiate with your creditors on your behalf. The negotiations carried out may help waive off fees or lower your interest rates or bills. The main focus of DMPs is to have your loans repaid within three to five years.
DMP allows you to make single monthly payments to your counseling agency, responsible for distributing it to your creditors. While the agency might charge you a small fee, it will be way lower than the cost savings you make on your bills. DMPs are commonly used for accounts that are not backed by collateral, such as credit cards. While it is upon you to decide which cards to include in your DMP, you will need to close all such cards that are part of the DMP.
If you feel that DMP would be a good option for you, you need to look for a trained credit counselor. You can meet them in person or work with them online. While many credit counseling companies are nonprofits, you should look into all available options. Make sure to go through the list of accreditations and reviews before you sign up with one. Then, before you get in touch with one, make sure you have all the information about your financial situation handy.