subject: Pros & Cons Of Debt Management Plans [print this page] A person who needs to pay loans, credit cards or any type of debt then a debt management plan is best for him.
What is Debt Management?
A person who is struggling with lots of debt and cant manage that debt then someone else talking to creditors behalf of the debtor and he convince the creditors to allow the debtor for monthly payment according to his capacity. This whole process is known as debt management.
An affordable repayment system of debt is known as a debt management plan which is organized by a Debt Management Company.
Who can eligible for Debt Management plans?
A person who has debt of more than 5000
A person who has 3 or more than 3 individual creditors.
A person who has disposable income of 100 or more per month.
Pros of Debt Management Plan
Reduced Payments: You can pay which you afford per month. Just remove money which you need for essential items like food and rent. You can pay as little as possible even 100 per month.
You have one monthly payment:Its easy to make one payment per month rather than to pay multiple creditors per month. It saves your time as well as cut down the pressure from your head.
Negotiations are done for you: The debt management advisor help debtor by doing all types of negotiation. He convinces creditor to cut down the payment.
Flexible Plan: If you get more income per month or the monthly income decreased than you can tell debt advisor to rise or lower the monthly payment.
Contact from Creditors: You get no pressure from creditors. Just forward the creditor calls and mails to debt advisors. He will give answers behalf of yourself.
Interest rates and charges: The debt advisor tries their best to cut down the charge of your debt as well as convince the creditors to cut down the interest on debt.This term depends on how your creditor is?
Informal Arrangement: The main and important benefit is that you are not tied to any type of contract. Whenever you want to leave the debt management plan you can easily leave it without any cancelation fees.
Cons of Debt Management Plan
Increases term of repayment:Your debt would increase if the payments have reduced the length of time.
Difficult to obtain further credit: You cant get further credit till this credit completion. It is the worse disadvantage of this debt management.
May not guarantee all creditors will agree: The debt management plan is not legal so it's not guaranteed that all creditors agree with this plan. If they dont agree with this plan debt management advisor do not force them to agree.
May still get connected by creditors: The debt management advisor deals with the creditor's behalf of yourself but sometimes the creditors directly contact you. No guaranty about it.
The debt Management plan is good because it cuts down your all credit at easy way and without any pressure. If you have constant income then this plan is best for you.
