Wish you could pay off your debt without the stress? With a debt management plan, you could pay off all your unsecured debts with 0 fees and low interest. The best part? You don’t have to deal with calls from creditors waiting for repayment. The way it works is simple. Instead of making payments to a bunch of creditors, you’d be working one on one with a credit counseling agency.
These debt management companies have relationships established with creditors, which makes being in a debt management program stress-free. Also, because they have working relationships with credit card companies, you can get fees waived and receive lower interest rates on your debt repayment plan.
All you have to do is make your payments to the debt relief management company of your choice, and they’ll handle the rest.
One thing to keep in mind when signing up for a plan is that even the best debt management programs will involve closing your credit cards. This could affect your credit score and will require you to be credit card-free until you finish the repayment plan. But you can always apply for a new card after the plan is done.
Debt management plans have benefits such as:
- Can help you reduce your interest rates by half (or more).
- Can help you pay off debt more quickly in comparison to going at it alone
- These plans will consolidate various different debts into one monthly payment.
But, like all debt relief options, debt management plans have certain drawbacks, which include:
- Debt management plans are primarily used for credit card debt.
- They cannot be used for tax obligations, student loans, secured loans or medical expenses.
- A debt management plan can take between three and five years to complete.
- While on a debt management plan, you will likely be unable to use credit cards or apply for new lines of credit.
- Missing a payment can derail your debt management plan and cancel out any decreases to your interest rates.