What are the Advantages of a Debt Management Plan?
The main advantage of a debt management plan is that you will have the satisfaction that you are paying your debts. You are no longer juggling your payments and wondering which of them to skip this month.
- You won't have multiple creditors to pay. Just one affordable monthly payment to the debt management company.
- You'll have less personal contact with the creditors.
- A debt management company is far more likely to succeed in getting your interest levels frozen and charges reduced.
- You won't incur further interest and fees associated with taking out a consolidation loan.
What is the Disadvantages of a Debt Management Plan?
As good as it sounds, there are some disadvantages with a Debt Management Loan.
- Your credit rating may be negatively affected for a longer term.
- Unless your interest rates are frozen or lowered, paying back a lower amount over a longer period could substantially increase the actual amount you repay.
- You will still need to pay your non-debt related bills. A debt management company will usually only be responsible for unsecured debts including credit cards, loans, overdrafts, storecards and catalogues.