Debt Management
What’s a Debt Management Plan?
Debt Management Plans can be an attractive way to lower your interest rates and combine your monthly unsecured debts into one lower payment. Managing your finances is the first step towards financial security. Before you can start saving, you need to pay off the money you owe, so developing a debt management plan that can help you tackle your consumer debt is important to your financial future. Debt management helps you eliminate consumer related debts faster and cheaper than you otherwise would be able to. Ideally, it allows you to combine several bills into one monthly payment, offering you a repayment schedule at a lower interest rate. Most such plans are negotiated on a three to five year repayment schedule.
Advantages and Disadvantages of a Debt Management Plan
The most obvious advantage of adopting a debt management plan is that it allows you to lower your interest rate while combining several bills into one responsibility. That said, however, you should be aware that there are disadvantages of debt management plans as well, including:
- Primarily for credit card debt
- Unable to combine medical, tax, or student loans
- Takes three to five years to complete
- Unable to use credit cards while in program
- Missing one payment can derail entire plan
Even with these disadvantages however, working with a debt relief company can help you regain your financial footing in the face of steep credit card debt.