A Quick Guide to Debt Management
March 31, 2010 by Dunkin
Many say that the first step in managing debt is saying that you need help. Gather all your pending bills and receipts, and take note of even the most trifling purchases that you make on a daily basis. Studying all these will give you an idea of your true financial outlook. Overdue payments, in particular, can add to your growing debt, because these often mean earning an additional penalty. Typically, once a professional debt counselor has had the opportunity to look through your accounts, then he will be able to recommend some options based on your needs. One of these choices is debt management.
Finding out what debt management is will help you decide if it’s the right alternative for you. Debt management is undertaken by a debt professional on your behalf to formulate the maximum amount that you as a debtor can pay based on your expenditures and income.
Unlike other alternatives, debt management is excellent when you have a lot of unsecured loans that need to be settled. These are kinds of loans that don’t need any collateral, such as credit card debt, medical bills, and personal loans. Debt management plans cannot pay off secured loans such as a car loan or a mortgage on your home.
One of the best things about debt management is that it stops you from borrowing more to pay off other loans. Often, this results in you getting your loan for crippling interest rates. Out of desperation, many have fallen foul of this plan. Mostly, this is because they are being intimidated by creditors. If you seek the help of a debt management firm, these tactics may cease. Debt management can help you trim the current monthly payments on your existing loans. Depending on your debt profile, creditors may choose to approve a fixed monthly payment or even knock off the prevailing interest rate on your loan.
But keep in mind that your creditors can choose axe your debt management plan at their discretion. Another downside of debt management is that it can affect your credit rating, or bar you from getting any more credit for some time. Depending on how large your debt is and your income, you can be bound to meet the agreed upon monthly payments for years to come.
However, debt management is not for everyone. Before you make a decision, make sure you are informed about all your options. Also, find a debt counselor that will help you without charging for a portion of the amount you pay to your creditor. Read the fine print before signing on to any debt management service.
today someone offered 2 pay for my counselor class,a internship with them,a nursing job and wiped out my remaining debt with them!GODS FAVOR
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Post by Frugal Dad
If you can get a cosigner w/ desent credit you would be able to get a car loan. But if you cant pay your credit cards how are you gonna pay a car payment, if that car gets repoed not only is your credit screwed but so is your cosigner.
August 2009 = Overall debt about $227,000
February 2010 = Overall debt about $229,000
I'd say that 6+ months is a big enough sample size to say that maybe it's time to go back to the drawing board and see if more drastic measures might need to be undertaken.
Forget about the August 2010 goal of no debt…I mean even if you have an August 2030 goal, the past 6 months is an indication that, as we say in Pittsburgh, “you can't get there from here!”
See a professional debt counselor and (again, I recommend) putting your income and expenses (down to the penny) on a spreadsheet so you can monitor every last bit of cash flow.
I'm rooting for you, but you've been spinning your wheels for a while now.
Doug