Incomes Growing Faster than Debt in US
A debt management program is a form of voluntary debt repayment program that is managed by a nonprofit consumer credit counseling agency. Before you opt to use this type of service; however, you should know that it has some unique advantages and disadvantages. Therefore, it’s essential that you carefully consider its pros and cons.
What are Debt Management Programs?
Debt management programs (DMP) are available to consumers irrespective of their credit score. A DMP is said to have a significant advantage over DIY debt consolidation as it provides struggling consumers with professional help; however, it has many unforeseen drawbacks as well.
One Low Monthly Payment Covers All Your Bills
Debt consolidation makes managing your bills easier, rolling all of your debts into one monthly payment. This payment will typically be less than what you were paying on your bills individually. Debt management plans can reduce your monthly payments by as much as 30 to 50 percent.
You’re Able to Get Out of Debt Faster
If you only make the minimum payment on your credit cards, it can take several decades to pay them off entirely. In contrast, a debt management plan allows you to pay off your debts in three to five years, because you are paying down your debt more efficiently. Interest charges and penalties are reduced or eliminated, which essentially lowers your overall debt.
Any Included Accounts Are Frozen
Once a creditor agrees to the proposed payment schedule, the account will be immediately frozen, which means that you can’t use it until you complete the program. However, you don’t have to include all of your credit cards in the program. You can opt to leave one card out to use for emergencies and even have the ability to add it to the program later on.
You Can’t Get New Credit Cards
Not only will your existing credit cards be frozen, but you won’t be able to apply for new ones during the time that you’re on the program. This limitation only applies to unsecured lines of credit, typically credit cards. You can still qualify for other types of financing, such as a mortgage or car loan.
The fact that you are proactively seeking debt settling options is a sign that you care about your financial future. If you’ve tried a debt management program or any other credit counseling services and have yet to find a solution, you may benefit from speaking with a knowledgeable debt settlement attorney. Attorney Heather Benveniste of Benveniste Law Offices has experience guiding Illinois consumers to debt relief through the most appropriate means. Allow her to do the same for you. Contact us today at 1-800-497-5358 for a free case evaluation.
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