What Are The Benefits of a Debt Management Plan?
Filed under Debt Management
Until the most recent (and rather awful) recession many of us had access to a lot of ‘excessive’ credit agreements and not realizing our mistakes we took full advantage of these agreements until the bubble burst and we realized that we were considerably in debt.
For some people the recession just meant a little worry and discomfort but for others it would mean that they risked losing their homes, businesses or just their general standard of living. For anyone who has found themselves in uncomfortable amounts of debt, a debt management plan is the key to getting back in to the black and becoming debt-free again.
So many people are struggling with repayments right now and there’s no need to be embarrassed or anxious about it because there is a lot that people can do to get help. Without a plan, you might feel powerless to control your financial burden but with a debt management plan you can see an end in sight.
The key benefits to a debt management plan are quite straightforward. They allow you to:
- Lower your monthly repayments
- Be debt free by a specified date (often between 36 and 60 months)
- Begin to rebuild your low credit score
- Put an end to letters and calls from lenders (because an agreement is in place)
- Become debt free sooner than you might otherwise
- Reduce or eliminate credit card fees
There are lots of types of debt management plans and it can be quite confusing if you’re not used to the jargon. The bottom line is: you don’t need to pay anyone for a debt management plan. There are many companies offering debt management services but they will skim a bit of money off every time you make a payment in order to make a profit. If you want to get a debt management plan together which doesn’t cost you anything all you need to do is get in touch with the Consumer Credit Counseling Service (CCCS.)
The CCCS is a charity, organized to help people who have problems with debt. They will talk you through options that won’t cost you anything and tell you where else you can get help. Be careful though, there are many websites with a similar name which are charging people for debt advice. Look for the registered charity logo or read ‘about’ pages to ensure you have the right website if you really want completely free and impartial help.
The Foundation for Credit Counseling is the organization behind the Consumer Credit Counsel ling Services (CCCS) and they run online advice teams and call centers in ten different regions, helping people to draw up debt management plans throughout the country. People from all walks of life get in to debt which they find difficult to control and the CCCS recognize this, offering a kind, friendly advice line.
Debt management includes a few different forms of plan. Usually when someone says ‘debt management’ they mean an Individual Voluntary Agreement (IVA), which allows you to strike up a new contract regarding repayments and restructure your debt. Other times they mean a consolidation loan which allows you to pay off all your existing debts with one new loan offering lower repayments and a specific end date.
Other options are available and if none of these suit your circumstances you could consider bankruptcy which can last between 1 – 6 years in some circumstances. Remember though, the first step to getting a debt management plan in place is speaking to someone who’s an expert.
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