Having an extreme amount of debt can cause people to feel as though they are drowning. It can be stressful trying to keep up with an endless number of bills that just never seem to fade. It can lead to stress not only for the individual person holding the debt, but also for the entire family. This can cause a huge strain on relationships.
One way to find debt solutions is through a debt management plan. Before making a decision, it is important to understand how they work. In understanding how they work a person can then decide if a debt management plan is right for them.
Debt management plans are debt solutions that consolidate all of person’s unsecured debts into one single, more affordable monthly payment. They payment is then distributed to all of the creditors over a certain period of time that has been agreed upon. A professional calculates the payment after consulting with the person about their current financial situation.
The monthly payment is based on what a person can afford after their monthly living expenses have been determined. In doing this the professional and the individual person can find an affordable payment plan so the individual can make payments without falling behind.
The consultant then takes the offer to the creditors and informs them of the monthly amount that can be paid and the amount of time it can be paid in. They request that the interest and any other charges be stopped and request that no other legal action be taken as long as the person maintains their end of the repayment. Once debt solutions are determined, the creditor agrees upon the debt management plan, it is the individual’s responsibility to keep up with their payments. Once a person has completed all their payments, they will be debt free from these creditors.
Finding the right debt management plan a person can be debt free in five years or less. When looking for a company that offers debt solutions a person should be sure they are a fully licensed and reputable company. Be sure to gain a complete understanding of any charges that will have to be made to the company and ask to see evidence that they are working to stop all extra charges from the creditors. A person does not have to live life stressed over their debts. There are options that can help them find a way back to financial freedom.
About the author: Catherine Hubbard is a debt advisor who is currently researching debt management plan. Visit www.bainesandernst.co.uk to learn more.
Photo credit: Nusrin