Why do so many people find themselves in need of a debt management program? Since the 1970’s the onslaught of unsecured credit card debt offerings and enticing ways to leverage purchases using personal lines of credit, more and more individuals are finding themselves in the “Debt Trap”. Unsecured Debt is the highest risk loan creditors can make, therefore it is also the most expensive money a borrower can borrow. Based on the profound reality of compounded interest very little of your monthly payments apply toward the principle balance. This is why it can take up to 6 years for every $3000.00 you owe to pay your creditors off, and this is assuming you don’t make any more purchases. Like a boat that has struck a rock and is taking on water, housing unsecured dept requires your immediate attention and action to rectify the situation. Listed are the options an individual has to choose from relating to Debt management.
Don’t hold off seeking Debt help until you are drowning in Debt.
Pay Forever Plan
The pay forever plan requires you to make the minimum payments at the exorbitant interest charges that unsecured debt yield. As mentioned earlier the only winner here is the creditor. For every $3000.00 owed it will take an average of 6 years to be free of that debt.
Many creditors realizing that their principle may be at risk due to a debtor being over-extended may offer interest rate reduction programs contingent upon a debtor enrolling into a Credit Counseling Program and closing their accounts. Credit and Debt Counseling programs offer a variety of budget planning sessions and educational programs to help better understand the risks of housing unsecured debt. They can teach financial disciplines one can engage to prevent ever getting stuck in the debt trap again.
Home Equity Loans
You can transfer the high interest of unsecured debt over to your mortgage by borrowing against your equity. This provides the benefit of lowering your monthly payment by reducing the interest and spreading the loan over 15 to 30 years.
Debt Negotiation is a program designed for individuals who have lost the ability to pay the minimum payments required by their creditors, and DO NOT want to file for bankruptcy. The goal is to offer a cash settlement on the balances owed. This is advantageous for the creditors to accept a settlement offer on past due accounts because in a lot of cases the creditor sells the debt to collection agencies for pennies on the dollar. Debt Negotiations does not inherent risks such as sending the accounts to collections, judgments, and wage garnishments. It may also have a negative impact on your credit rating.