Some people might have got too many loans to repay or got overdues on credit card payments. Piling up all the debt is definitely a very bad idea as you might never find a way to pay it all off. There has to be a way to handle your debt in one monthly repayment scheme. That is where debt management plans get into the picture.
Debt management plan is a service provided by a third party that doesn’t belong to a bank or an NBFC. These third-party service providers have credit advisors who will help you get all your debts resolved in one reasonable rate. But the type of debts that can be resolved are only of the unsecured debt types. Like personal loans, student loans, credit card payments etc.
Here is how a debt management plan will work:
1. The credit advisors will try to understand your financial situation to see how you can pay off all your accumulated debt
2. Once they figure out a repayment plan and you’re on board with it, they will get into contact with your current lenders to cut a deal.
3. You credit advisor will propose a plan where you would be able to pay an affordable amount every month.
4. Once you’ve agreed to the plan, you would be making monthly payments to the company that helped you with your debt management plan. They will make sure that regular payments are made to your creditors. Eventually, all your debt gets dissolved.
As you’ll be trusting this third party to take care of your finances its’ necessary that they are trustworthy and a reputed company. So, if you’re not able to juggle your debts it is better to take on a debt management plan, which makes it easier for you to get your debts out of the way.