There are times when our debt just gets out of control. You get harassed by creditors and collectors, everyone wants your money, and still you do not have enough income to pay off your debt. This is the right time to check out the options of getting the debt relief through debt consolidation, debt management or bankruptcy. This can be done either by reducing your debt amount or by lowering your monthly payments. The debt consolidation management might appear just the right way to solve your problems.
The main feature consolidation debt management is reducing the number of the creditors. A lot of people get lots in the tons of papers, tending to forget things. You get the big loan to cover the smaller ones. Still before agreeing on the option, consider the following things:
- Does your house cost just as much as the loan? If the loan is cheaper, than it’s not wise to put your house on the line in order to close the credit cards balance. By opting for the debt consolidation you exchange the unsecured loans for the secured ones.
- The lower your interest rate is, the longer you pay the sum. Use the credit card calculator in order to check whether you’re paying the same amount on the card as you would for a second mortgage. Perhaps the credit line is going to work faster.
One more option is to roll your greatest unsecured debts to one single credit card with the lowers interest rate. Be careful with the teaser rates since they tend to rise in a couple of months. In case you’ve maxed out already this option might not appear to be accessible.
Debt management program
The debt management consolidation program also known as DMP is the great chance to deal with your debts. On the free session the experienced credit counselor will look through your income and help you to develop your budget that will enable you to pay debts and make a living.
Sometimes this is just enough to solve the problem. There are cases when people are just spending too much, breaking their budget balance. For this case all they need is to reduce their outcome and fit into the budget program. It’s not too hard with the set of tips the credit counselor is able to give.
After the credit counseling consultation you receive the budget and detailed step-by-step plan concerning your further actions. Still there are cases when the simple budget management is not enough to help. Then it’s time to resort to Debt Management Program.
How it all works:
- Credit Counselor runs the negotiation with your creditors trying to talk them into reducing the monthly payments over 48 or 60 months. He usually knows the approximate amount of interest rate the defined creditor will be satisfied with. The procedure helps a lot of families keeping them from bankruptcy. In 4 or 5 years most of the clients appear to be debt free.
- Credit Counselor will talk your creditors into canceling the late fees and other charges. They will ask to re-age your account if possible. In other words your account becomes current, thus you’re no more behind and shall not pay any late fees. For this reason the collector calls stop as well.
- With the help of Credit Counselor you get one single monthly payment in order not to make a lot of paperwork. The closer you get to the debt relief, the more amounts of money your creditors obtain. Be attentive with your payments; make sure your balance if updated regularly.
Some people tend to think the DMP is the same thing as debt consolidation since in both cases you make one single monthly payment. However in case of DMP you’re not getting the new loan, while in debt consolidation you get the secured loan with low interest rate for paying off the unsecured loans. The credit counselors do is negotiating about reducing your debt and declining the charges, still your budget remains yours. Some people consider debt consolidation and management to be too complicated, still they are much better then bankruptcy.