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debt management plan is a payment plan, negotiated by a credit counselor on your
behalf, to repay your debts.
Here's an example: Let's assume you owe $30,000
on six different credit cards. Each of the six credit cards has six different
payment due dates, so you are finding it hard to make all of your payments each
month on time.
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In addition, the interest rates on your credit cards are very high,
so each month most of your payment goes towards the interest only; you are not
repaying much of the principal. |
It's frustrating, because you have a good job
and a good income, but you can't seem to get ahead. You do well for a month or
two, and then unexpected car repairs or family expenses put you behind again.
What
can you do? You could file a debt management plan. Here's how it works: A
credit counselor will help you make a list of your debts, and they will work with
you to create a monthly budget. With this information they will determine a repayment
plan. In our example above, your total debts were $30,000, so they may work
out a repayment plan where you pay $1,000 per month for 30 months. In many cases
the credit card companies will be willing to reduce or eliminate the interest
they are charging, so all of your payments go towards reducing your debts. Even
better, in a lot of cases the credit card companies actually pay the fees of the
debt management company, so all you pay is the payment towards your debt, which
is why a debt management plan may be the perfect solution for you. Contact a
credit counsellor today to determine if a debt management plan is right for you.
For more information, search our site or the web:
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