Debt Consolidation

How To Sign Up For A Debt Management Plan? How Much Does It Cost?

It is true that when you sign up for a debt management plan with a company, you have to pay a certain amount of money as fee for their services. So, how can it be an affordable solution for you? You are already in debt and now you are hiring someone to manage your debts and you are paying them in return. Isn’t it like adding more financial liability on your shoulders? If signing up for such a plan is adding more financial liability on you, it definitely does not make the right solution for you. But yes, if you can find a debt management company that helps you to save more than what they charge as their service fee, it sounds an attractive deal. In most cases, these companies negotiate with your lenders and convince them to reduce the rates and waive off penalty charges. Therefore, you are advised to first do a thorough calculation on how much money you will actually be able to save if you go for a specific plan and how much you are being charged for that plan. If the plan helps you to reduce your debts by $1000 and it costs you $500, it is obviously a fair deal. Following is a brief rundown on some of the important factors that you need to keep in mind while you are looking out for the best plan.

Find Out If Your Creditors Are Willing To Participate

When it comes to choosing the best debt management plan, the first thing that you have to do is to find out if your creditors will agree to the plan you are considering signing up. In most cases, the chances are that some of your creditors will refuse to work with such plans. But, you need not be disappointed. You probably have too many creditors to handle on your own. Probably that is the reason why you are looking out for someone who can help you manage your debt problems. Just look at how many of your creditors are going to participate in the plan. Look at the overall amount of debt you owe to each other. Now, do the same calculation over again. It means you will have to see if you will end up saving some money or your financial burden will just increase a little up if you sign up for a specific plan. You may consider going for it if it helps you to save some money on your debts.

Reduction In Debts

Before you sign up for a debt management plan, you should pay special attention to how the reduction in debts is taking place because of this. Most creditors will easily agree to waive off penalty charges and reduce the interest rates. But, they may not be willing to reduce the principal amount. Still, you may be lucky enough to have some lenders who even reduce the principal amounts. A thorough review of how the reduction is being done on your debts will help you make an informed decision.

Last, but not the least, you are strongly recommended to do a thorough comparison-shopping before you finally go ahead and sign up for a specific debt management plan. You can do this by requesting free, no-obligation quotes from different companies and then by comparing the offers made by them.

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