Debt management plans are for people who are in serious debt trouble. If you are one among them, then you may be benefited from a sound debt management program in the sense that you pay your debt off at more affordable rate by making reduced monthly payments.
Why a debt management plan?
A debt management plan is beneficial for individual or business owner who can no longer afford any unsecured debt repayments each month. You can make one manageable payment each month giving flexibility of debt management, meaning you will be able to reduce your repayments to a level you can afford.
How does it work?
A debt management agency negotiates with the creditors on the behalf of a debtor in order to reduce or freeze your interest rates, waive late fees, and make you monthly payments more manageable. Debtor pays monthly payment to the agency, which then pays out payments to the creditor. While doing so, the agency deducts a small portion of the payment as administrative fee.
Fundamentals of debt management plan
Before you opt for a debt management plan, you first need to work out on your own personal budget. This will help you analyse whether you have enough cash to be able to make monthly payments or not. Below are some templates that will help you formulating a rough draft of your income, consider the following factors:
- Make a list of your income, which includes everything you earn
- Make a list of your expenses, for example rent or mortgage payments, household bills, travel and food etc.
- Deduct you expenses from your income and the money that remains is your income that can be used to repay your debts.
There are many debt management companies offering various online debt management plans that will streamline your debts and help you pay off your debts in an effective manner.
0 comments:
Post a Comment