Debt Management Plans

It is crucial that consumers are aware of the options that exist to help them resolve their debts and improve their financial situation. Some consumers seek debt management plans while other may seek individual voluntary arrangements (IVA) or even bankruptcy. Debt management plans differ from IVAs and bankruptcy declarations in that they are not bound by a legal authority.


>Many debtors prefer to seek a debt management plan first as it often allowsthem more freedom. With a debt management plan, consumers closely inspect both their incomes, expenses and any debts they have incurred. With the help of a counselor, negotiations are made with creditors to seek both lower interest rates and a reasonable payment for the consumer. Sometimes creditors even will agree to waive interest payments in their entirety.

Once an agreement is reached and a plan drawn up, consumers only need to make one monthly payment to the counselor who then oversees the plan’s execution. The counselor pays the creditors out of the monthly payment. Many find this another advantage of a debt management plan, only making one payment to one person each month.


If considering a debt management plan, it would be prudent to search around to compare fees prior to settling on a firm with which to deal. Another point to investigate would be your ability to terminate the service of the debt management counselor if you choose. Some firms require contracts and even deposits to be made initially. If required to make a deposit, check to see if this deposit is refundableupon termination of services.

Some consumers find that a debt management plan may tie them to their debts for the remainder of their life. This is especially true is a person has amassed a tremendous amount of debt and is only able to afford a small payment each month. When seeking resolution for financial woes, it is imperative that consumers be their own detectives and figure out what works best for them.