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Debt Management
Home > Money > Debt Help > Debt Management Disclaimer: This section provides information for people with debt problems. The comments and opinions on this page are for information purposes only and are not meant to be a substitute for professional debt help advice.
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2) DEBT MANAGEMENT PLAN |
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This type of debt help is used for people with severe debt that can only afford to make small payments to their creditors (People you owe money to) each month. The debt management company deals directly with your creditors and you just pay the debt management company one payment each month. The advantage of this type of debt help is that your interest on all of your borrowings e.g. loans and credit cards is frozen. You then just make one payment to the debt management company each month.
The disadvantages of this type of formal arrangement are that sometimes plans can run for 20 years or more. Also for every payment you make to the debt management company, it is not uncommon for them to retain 15% + of this payment for their fees. So if you are paying 15% + in fees on everything, you pay for perhaps 20 years, is this really going to help? It is the opinion of the author of this article that this is not. It is just dragging the problem out and making the debt management company a lot of money for doing something that you could do yourself. We will discuss ways that you can help yourself later in this chapter. |
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