Are you in serious business debt, or even worse, personal? Well, that’s unfortunate but you should understand that corporate or individual debt does not define the end of the world. Dealing with business debt is really common today, especially post recession and the rising aspirations in every family have provided a really conducive environment for rising debt. However, it is possible to get rid of debt safely and lead a stress-free life once again, thanks to the various debt management programs around. The article here offers a brief on the most important debt management solutions which might be helpful for your business or yourself.
Who Should Consider It?
Who should consider debt management services? There are certain kinds of debt that are better suited to debt management solutions. Secured debt is not traditionally the right kind of debt for these services. Debt management solutions should only be considered a viable option for unsecured debt accrued through credit cards, medical bills or other non-collateral debts. If you have problems with unsecured debt, find out about the debt management solutions you can consider below.
Whether it’s a fortune 500 company or single income household, debt consolidation refers to the process of taking to one new loan for paying the existing debts. Staying true to its name, the consolidation program actually groups all the existent debts into one loan. It streamlines the payments for you, making you pay simply one single bill each month. This is a much better financial decision than leveraging pre owned cars as collateral. There is no question of managing multiple bills and due dates when you take to debt consolidation plan. You will even bag lower rate of interest and the facility of lower payments each month compared to the combined monthly payments and interest rates of your existing debts.
It’s to stress here that various debt consolidation companies offer on a non-profit basis which charge lower fees from the clients as these organizations run by funds from donations & funding by creditors. However, before you settle with a non-profit debt consolidation company, make sure to check its non-profit status.
Debt Management Plan
DMP or debt management plan is another very popular debt management program. Though debt consolidation and management is usually mixed up, yet there is a fine difference between the two of them. As mentioned earlier, debt consolidation refers to securing one new loan to pay off the old debts. But in case of DMP, the company will negotiate a new plan of payment for you through detailed discussions with your creditors. Thus, unlike the debt consolidation solution, DMP does not make you take a new loan and you will still have your old debts- but this time with lower rate of interest and lower payments every month.
When you are planning to take to debt management, you will have to proceed with consultation with certified credit counselor. The credit counselor will review your debt & financial situation and then will devise a tailor-made DMP for you. The credit counselor himself will contact your creditors and negotiate for lower monthly payments and reduced interest rate on your behalf. It is always advised to go for experienced credit counselors who are backed by seasoned negotiation skills.
Non Profit Debt Management
The NFCC, or National Foundation for Credit Counseling, is a not-for-profit agency that will help you devise the best debt management plan possible. This organization will do all of the things discussed above to secure you a lower interest rate and lower minimum monthly payment. The difference between the NFCC and other options available is that this organization does not earn anything from you at all. You will not have to worry about hidden fees or charges for services. This debt management plan service is provided free of charge to help you get back on your feet. However, you will still have to manage entertainment expenses for yourself on your own. If you want to finally experience relief from your debts, give the NFCC a call. They will help you find a credit counselor that can improve your financial health now and for the future.
Debt settlement is the solution when you cannot repay the entire debt amount but can repay a part of it, if the creditors cancel your debt. When you are working with a debt settlement firm, you will start paying the agency every month that would be stored in your escrow account- till it reaches the repay amount you can afford. Then, the settlement officials will sit with your creditors and negotiate out a reduced amount for you. This does not involve accounting firms at all. However, it may impact your credit for years to come.
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