Effective control of your debts is a great way of putting a happy bounce into your financial steps. However, with a wide range of debt relief options, choosing the right path for your future financial freedom may be quite daunting. While everyone’s financial situation is unique and different, a debt management program has been proven to help people pay their debts in more favorable ways, providing them with a plethora of little-known benefits.
Lowering your interest rates
Enrolling for a debt management program is an indication that you are ready and willing to pay 100 percent of your debts. Consequently, many creditors will also be willing to help you out of your situation by lowering your interest rates and waiving certain fees for you. In fact, some creditors will even be ready to mark your past-due accounts or profiles as “current” after accepting your debt management program and receiving 3 to 4 consecutive payments. All these gestures will go a long way in helping you reduce your monthly debt payments, making your debts more manageable.
Maintaining your reputation
A debt management program will also protect your reputation, which would otherwise make it quite complex for you to borrow in future. To begin with, a debt management program will help you avoid the temptation of filing for bankruptcy. Again, you creditors will appreciate and even willing to work with you again when they see your commitment to pay through a debt management program.
What’s more, debt management program increases your credit score. Because a debt management program enables you to repay everything that you owe and prevents you from opening fresh lines of credit, you credit score will be significantly boosted in the long run.
Shorter repayment period
As aforementioned, after your situation is negotiated with your creditors, your interest rates will be lower. Accordingly, a smaller percentage of your monthly payments will be channeled towards your interest and a bigger percentage will be directed to repaying your principal balances. Generally, this shortens your repayment period. Moreover, during a debt management program, you will be given an informed estimate of the period it will take to clear off your debt.
By and large, a debt management program will immediately stabilize your situation and give you a much better recovery path, especially when compared to options such as bankruptcy and debt settlement. To put things straight, nonetheless, the only way to know if your situation really needs a debt management program is to consult a debt and budget counselor. They will be in a better position to provide you with a clearer picture of how your debt management program will look like, your monthly payments, and how long it will take for you to gain your financial freedom.