In the first installment of this series we explored some of the basic elements that make up debt management programs. We wanted to give a general overview of what is involved and how this course of action could help somehow who might be in a position of needing a little help with their debt load.
As a followup to that overview, we thought it might me helpful to briefly lay out some of the pros and cons of a debt management plan.
Pros of Debt Management Plans:
- A reduction in the amount you pay for debt each month. Very helpful in getting your finances back under control with a more manageable monthly payment schedule.
- Elimination of the cost you might otherwise incur like late fee and over-the-limit fees.
- No more pesky calls from numerous debt collection agencies looking to harass you for repayment.
- You credit score is not as adversely affected as it would be if you would have had to declare bankruptcy.
Cons of Debt Management Plans
- You have to stick to a strict payment plan based upon the terms of your agreement.
- You will have limited or no use of credit cards for a couple of years until you get your situation under control.
- You will not be able to get a car loan or a home mortgage at a good interest rate for a couple of years.
- You will incur some costs that might be higher than if you were able to work out plans with your creditors by yourself.
There is obviously a lot to think about when it comes to seeking a debt management program, but for many people facing a situation of a heavy debt load that has gotten out of control, it might be a viable solution.