In a perfect world we would all be debt free and have money set aside for retirement. Unfortunately we don’t live in a perfect world and good hardworking people are saddled with debt and struggle to save for their future. Many people go about their daily lives waiting for a solution to their debt problems to fall from the sky until one day they hit rock bottom and decide they need to get some help.
Help comes in many forms and no individual debt relief option is right for everybody. The value in knowing your options and choosing one that works for you is like taking your first step. Scary as it may be, making the decision to do something about your debt puts you in control of your debt instead of the other way around.
There’s an option called a Debt Management Plan (DMP), it’s not bankruptcy, its not settlement it’s a way to pay back what you owe your creditors quickly, on terms you can afford.
Here’s how a Debt Management Company can help you.
- The debt management company signs you up for a DMP, bringing all your financial obligations (e.g. unsecured debt and credit card accounts) under one umbrella for easier management.
- Shortly before your first payments are due to your creditors, your debt management company sends proposals to your creditors, requesting special benefits to help you repay your debt as long as you make regular and timely payments. Benefits may include lower interest rates, waived late and over-the-limit fees, and reduced monthly payments.
- You make a single monthly payment to the debt management company, which uses those funds to pay your creditors on your behalf.
- Generally, after you have made three consecutive payments, your creditors will extend benefits through the DMP.
- You continue making payments on your DMP – often at a reduced amount secured by your debt management company.
- Finally, you make your last payment at the end of your DMP and smile because you have paid off your debt in full.
A Debt Management Plan is not a fall from the sky solution but it is an option to help solve financial problems over a short period of time, typically between three and five years. It takes a strong commitment and tenacity to start and stick to a Debt Management Plan and listen to the bankruptcy advice given to you by the professional.
Then, when you’ve completed your DMP, you can move forward and manage your finances on your own, armed with the knowledge gained through this process. Hard work now, yields a happier wallet later.
source: everythingfinanceblog.com