Debt is a huge problem for many of us. The latest Federal Reserve Data puts the cumulative credit card debt in the US at $986 billion by the end of 2022.
But credit cards aren’t the only debt Americans face every day, with mortgage debt now at $11.92 trillion, auto loan debt at $1.55 trillion, and student loan debt at $1.60 trillion. Any American over 18 years of age can struggle with any of these types of debt, with everyone looking for ways to get out of debt as soon as possible.
This article is going to focus on debt management programs, including what they are and how they can help you.
Debt Management Programs
In a debt management program, management companies deliberate with your creditors to formulate a plan to pay back your debt. The motive is to reduce the ultimate burden of unsecured debt by consolidating the debt into affordable plans.
Credit counselors can help to reduce interest rates and payment amounts. They can also waive or reduce penalties.
Before you go out and let a credit counselor develop a consolidated and personalized repayment plan for you, there are many things you will need to consider.
Do It Yourself
First of all, it is possible to formulate a debt management plan for yourself. All you need to do is go and talk to your creditor and explain your inability to pay. You can then ask them to expand the debt for a longer period.
Many creditors will be able to support you. If they cannot offer any help, then it would be advisable to seek a credit counselor.
Credit Score
Sometimes, your credit score might see a drop after enrolling in a debt management plan. Of course, this depends on an individual’s circumstances.
For example, if you have current outstanding payments and are late on the previous ones, the chances are that your credit score might increase by enrolling in a plan. But, if you are prompt with your current payments, the chances are that your score might drop.
Check Better Business Bureau
To protect yourself from any sort of fraud, always check the credentials of the company offering the debt management program with the Better Business Bureau.
A credible organization will provide you with superlative counseling and help to get you out of the debt trap. It is always better to do some research into the company first so that you have full confidence in your debt management program.
You Will Benefit from the Consistency of Payments
One of the best aspects of a debt management program is that you will find some stability in your life.
Where a vicious circle of interest, principals, surcharges, and late fees are disruptive to your daily lifestyle, a debt management plan will put all of your debt into one place. This means that you will only have one monthly payment to think about.
Since your payment is fixed on a monthly basis, you can plan ahead and keep aside your disposable income beforehand.
Choosing a Debt Management Program
While you may have doubts about credit counseling, it is definitely a good choice if you need to get your payments back on track. The counselors might charge a small fee but it is a small price to pay for a calmer and debt-free life.
As a precaution, try to deal with companies that are accredited by the National Foundation for Credit Counseling (NFCC) or the Financial Counseling Association of America (FCAA). They have strict guidelines for giving certifications and will help you choose the best company to suit your needs.
The Bottom Line
Debt is a big burden on our lives and can have many negative impacts. If you wish to get you and your family out of debt, you may want to consider a debt management plan. These plans are easy to find and offer a simple way out.
Be sure to do some research to find a plan that’s right for you.