If you’ve found yourself in what feels like insurmountable debt, you may feel like there’s no way out other than bankruptcy. Luckily, there are other avenues to explore. A good step towards reducing your debt is taking a close look at your finances. In many cases, having an experienced third party give you a new perspective can make a big difference. One way to do this is enrolling in a debt management plan through a non-profit credit counseling agency. Typically, the first step of these plans is having a financial advisor look at your spending habits and debts and seeing where you may be able to cut back. Next, the agency reaches out to all of your creditors and negotiates with them. They may be able to get you lowered payments or waived fees. The goal is to get all of your debt into a manageable monthly schedule. Once everyone agrees on a plan, you make a single monthly payment to the credit counseling agency of your choice and they disperse the funds to your creditors.
There are plenty of benefits of enrolling in a debt management plan, also known as debt consolidation programs. First, the non-profit credit counseling agency has experience with creditors, debt, and good financial habits. They can offer you guidance that will aid your spending habits after you conquer your debt. They already have relationships with your creditors and get into contact with them on your behalf to negotiate. This can mean better results in reducing fees or payments than you might receive if you reached out to your creditors on your own. The debt that’s most often covered by debt consolidation programs is called “unsecured debt.” This is debt that isn’t covered by collateral. For example, a car loan or mortgage wouldn’t be included. The most common types of included unsecured debt are credit card debt, medical bills, and personal loans.
Each state has different requirement for payment for these programs, but you can expect an enrollment fee and possible a recurring fee. That being said, working with a financial advisor and paying down your debt has a ton of benefits, including raising your credit score over time and putting more money in your pocket once you're debt-free. For more information you can follow this link: https://en.wikipedia.org/wiki/Debt.
