Prime Debt Management - Debt Management Plan

Debt Management Plan

Do you know what a debt management plan is? It's a generic term for many different plans, all designed to help you get out of debt.

Debt Management Plans Defined

To put it simply, there are about five different kinds of debt management plans. We'll outline each one and give a brief description of each below:

Debt Consolidation - A popular debt management plan that centers around negotiation and reduction. A debt management expert contacts your creditors and negotiates with them for reductions in your balances and interest rates. If you have any nuisance fees (like late fees or over-the-limit fees) they will try to get those eliminated too. Then they bundle your new balances together into one, and all you have to do is make one monthly payment to the debt consolidation company.

Student Loan Debt Consolidation - This tool combines all your student loans together into one and gets you a much lower, fixed interest rate. Your monthly student loan payments are reduced by nearly 50%, too, because your payments are stretched out for a longer period of time.

Debt Settlement - Negotiation takes place to get your debt reduced. You end up paying only 30-50 cents on the dollar, but you have to pay it off immediately, so you have to have access to that much money all at once. Some debt settlement plans will let you stretch it out over a year, and some will go as long as three years, but those are rare.

Debt Consolidation Loan - A loan given to you to pay off your unsecured debts. Usually, this requires some sort of collateral, and even though you are able to pay off your creditors quickly, you still have to pay the loan back. The interest rate on the loan is usually a lot lower (sometimes even half) of what you were paying to your creditors.

Debt Consolidation Mortgage - Allows you to borrow from the equity in your house to pay off your unsecured debts. The loan payments are tied in with your mortgage, so the interest rate is a lot lower, but your house is your collateral, so if you miss payments, you lose your house.

This should give you a good idea of what's available. If you think one of these tools would help you, search the Internet for a debt management company. They will be able to provide you with professional advice and the right debt management plan for your situation.

Related Resources: