A Debt Management Program You Can Actually Manage

Once upon a time there was a debt monster that moved into a married couple's house. The terrible monster took up residence in his garage (in the form of a BMW) and in his living room (pretending to be a 55-inch television). The creature learned that it could eat up the savings that the couple had hidden in the cookie jar. Not only that, the monster also had absolute control of all the couple’s finances.

Eventually, the couple learned that there are debt management solutions available to help them with their financial situation and so they went into one. This, along with other strategies to reduce their debt, helped them make the monster disappear. Yes, this sounds like a story for a good book, but it is also a reality that affects many people; not only married couples.

If you still don't know how to manage your debts, you probably feel that the owner of your finances is a monster. But do not worry, in this article you will teach you some tips on how debt management programs work, their pros and cons, and the alternatives that will help you pay your debts.

Concepts That Affect Your Financial Situation

Debt

What you owe when you borrow something from someone (cash or goods) or when you buy on credit. When you borrow money, either a person or an institution will normally charge you interest, that is, a charge for the use of that money. One can owe to family, friends, informal moneylenders or financial institutions.

Loan

It is an operation through which a financial institution or bank makes a certain amount of money available to us through a contract. As a general rule, the return of the borrowed money will be made in a number of monthly installments that will include the commissions and interests stipulated in the contract.

Credit

The capacity or amount of money that one can borrow or buy on credit. It is getting the product you want without paying for it in full at the time of purchase, and making a commitment to pay in installments or on a certain date in the future.

Signs You Are In Debt

You use credit to buy things that you would normally buy with cash.
You obtain loans or extensions to pay debts.
You use savings to pay off loans.
You use credit for basic expenses.
There is no availability for any type of savings.
There is no availability to cover necessary provisions such as medical insurance etc.

If you manage your expenses, according to budget, it will be very difficult for you to fall into high debt, and if you currently are, ask about the debt consolidation plans offered by banking institutions, these are a good way to reduce fees and begin to stabilize your finances.

What Is a Debt Management Program?

A debt management program is one which has professional financial advisors ready to assess your finances to see if there should be an intervention into working on your behalf to speak with your creditors and come to an agreement of how much has to be paid each month to meet your obligation or get back on par. The financial advisor's responsibility is to act as a liaison; give you recommendations, help you keep on track, help you pay the expenses and control spending. It is a strict program that you need to follow, if you want to get your financial situation in order.

The Organizations

Debt management organizations review your income and expenses and recommend the best plan to pay off your outstanding debts. They work directly with your creditors to lower credit card interest rates, shorten payment times, and waive late fees and penalties.

Rather than keep making individual payments to creditors, a debt management company consolidates all of your unsecured debt into one payment. By doing so, the interest rates on credit cards and loans are typically lower. On average, you can finish paying your debts in 3 to 5 years. In addition to paying off debts, you will learn how to stop overspending.

Who Is It For?

If you have debts that have proven to be out of your control; meaning, you are unable to pay them on time or if you feel that bankruptcy is looming ahead, you could need debt management program assistance. However, you have to assess whether you really will benefit for one of these programs or not. Here are some questions you need to ask yourself. Be realistic and honest, if you want to find the right answers.

Do you feel stressed due to your finances being out of control?
Do you think you need help in learning and understanding personal debt management?
Do you find yourself receiving numerous calls from creditors?
Are you being flooded with email messages about how much you owe your creditors?
Is your phone overloaded with messages from creditors or collectors?
Do you feel okay that you don’t have access to using your credit card or line of credit?
Do you have the discipline it will take to remain in a strict debt management program; even as much as five years?
Are you okay with the fact that your creditors will report to the credit bureaus that you are on a debt management program? Some lenders view debt management programs as a red flag and won’t qualify you for future loans.

If your answer to most of the questions above is ‘yes,’ then you do qualify for a debt management program or plan to improve your financial situation.

+ Pros

Your responsibility is to make one single payment rather than multiple payments. In addition, your monthly bill stays constant. As you pay each creditor, additional funds are freed up to pay other creditors.
Interest rates, fees, and monthly payments can be reduced.
You will know the exact date when you will finish paying your debt.
The average time to pay the debt is 36 to 60 months.
Your credit score and history improve over time.
Creditors stop contacting you to ask you to pay your bills.
You learn to have a budget (and stick to it) and organize your finances.

-Cons

You typically cannot request or utilize more credit once you are in the program.
Be careful when enrolling in one of these programs because some of them operate as non-profit organizations, but there are others that will charge you a fee. Because of the nature of the business, you could be dealing with a fraudulent organization that is trying to scam you with hidden fees.
The average period to finalize payment of the debt is between thirty six months to sixty months.
You have to stay on top of things to ensure that the organization pays the monthly bills in a timely manner and according to the specific plan that was initiated for you.
If you should quit the program, it is more than likely that you will not have access to the interest rate reductions anymore. In addition, you may be responsible for paying the related penalties.
You still have to keep making payments on the additional debts, which have not qualified for the debt management program. Some of these may include child support, IRS tax debt or secured credit card or secured loan debts.

How to Choose A Debt Management Plan or Program?

Before you sign up for a debt management program or plan; since it is long term, make sure to do your research fist to find the right company. Make the phone call to ask pertinent questions prior to enrolling and be sure that you understand the terms of the agreement and know what your monthly payment will be as well as any fees that will be charged by the agency. Find out whether there are any penalties associated with dropping the program prior to its ending. You should also inquire how many years it will take to pay off your debt. Make sure that the company is accredited and licensed; and is a non-profit. Verify that the license is current in the state where you live. Before accepting a quote from any debt management company, be sure that they ask for your current financial statements and a compilation of how much you owe to your creditors. Stay away from companies that charge high fees or multiple fees. Be sure you can afford the monthly fees because that is the reason you are seeking help in the first place.

Get Advice on How to Manage Debt Better. Debtry Can Help You.

GET MEMBR KEY

How Can Goalry App Help with Debt Tracking

The Goalry mall is a financial mall, which unifies finance and allows members to do all things related to finance once logged in. Debtry is a store within the Goalry mall. This is a financial store that offers the user access to an innovative debt tracker app. With the debt tracker app, you will be able to control your debts in one place; being able to repay them in a timely manner so you can become debt free. The app will also help you to:

Conclusion

If you are in debt, it is not the end of the world as many people are experiencing the same thing, but the good thing is that there is help. You don’t have to do this alone. There are apps, programs and plans that will give you the resources necessary to become debt free. It is your responsibility to choose the one that is best for you.