Today our guest is Giselle Spenard. Giselle is a financial writer who has profound knowledge on the financial industry. She contributes her articles to different financial websites, blogs and communities. Some topics covered by her are unique debt consolidation solutions, the benefits of debt consolidation and many more.
Debt management plan is mainly about getting help of a debt management company, who can guide you not only in managing the finances well, but also in becoming debt free. However, you must be wondering as to how can a debt management plan or DMP help you in becoming debt free, when you are already having problems in paying down your debts. A counselor who will help you with the DMP is an experienced person and has better knowledge than you. Therefore, if you would want to become debt free, it would be important for you to join a debt management plan – which is an unique debt consolidation plan.
What is a DMP about?
DMP or a debt management plan/program is mainly about paying off your debts as per the program. The program is offered to you based on your financial condition. When you go to a debt management company for help, they start analyzing your finances and determine the total debt amount you will have to payoff. It is mainly the counselor who deals with you and represents your case to the creditors. So, it is the counselor who negotiates with the creditors, in order to be able to lower the interest rate on your debts.
Benefits of a DMP:
Below are the benefits of a DMP:
Managing and avoiding debt becomes easy – With DMP, managing your debts become easy as you get to know more on debt management and avoiding debts. Furthermore, it is the debt management company which represents you and deals with your creditors, in order to be able to help you with paying down the debts. However, it is in your hands that the fact of incurrence of further debts rests. It is you who will have to avoid incurring any additional debts. Or else, it is going to be tough for you to payoff your debts and become debt free, even through a DMP.
Lowers the interest rate – With DMP, the interest rate on your debts get lowered. After analyzing your debt situation and finances as a whole, the counselor starts negotiating with your creditors. The counselor will not only negotiate with the creditors in order to be able to lower the interest rate (just like debt consolidation), but may also negotiate, in order to waive off the late payment charges and other penalty fees associated with non-payment and missed payments.
You are required to make only one payment – You are required to make only one payment in a month, after enrolling in a DMP. After the counselor settles the debt payments with the creditors, you get to make the payments through the management company as per the lowered rate of interest. You will have to make a single but large payment to the debt management company, who will then disburse the money amongst your creditors.
You aren’t required to negotiate – You aren’t required to negotiate with the creditors in any form, or for making the payments. This lowers the stress and the hassles of becoming debt free. The debt management company almost works as the shield. However, you will have to make sure that you get help from an authentic company, or else your debt issues are going to worsen. Furthermore, you are handing over your hard earned money to another person and not the creditor. This should be done only when you trust that person and therefore, you need to check if the debt management company and the counselor is a trustworthy person.
So, this is how you benefit from DMP. Only if you can avoid incurring further debts when in a DMP, you may easily be able to become a financially debt free person. Avoiding debt is important because, without that you will have to go on balancing the debt cycle throughout your life.