Top 5 reasons for debt consolidation
The debt management program (also known as the debt consolidation program) is the best type of debt consolidation program to enter into. Debt management programs are more beneficial than receiving a consolidation loan, doing debt settlement, bankruptcy or playing on your own. It is the only way to pay ones debts off without destroying ones credit or paying back the debt for over a twenty year period. When doing a debt management program one balances are not negotiated, but minimum payments, interest rates and debt lengths are dropped dramatically. Consumers get out of debt in a fast effective way that is much easier on their household.
There are numerous benefits for debt consolidation:
One, there is absolutely no negotiation of one debt balances. The debt are still being paid, but without all of the interests. The debts interests are negotiated to a lower interest as well as a different type of interest. The problem that consumers are having now is that they are not able to get their balances down due to the interests. The interests that one is being charged is compound interest which is compounded each day. One would have to pay three maybe four times as much each month to see their balances go down. When receiving a lower simple interest it will have the opposite effect. When paying minimum payments each month the money will start going towards principal balances instead of the interests.
Two, having three to five or more payments a month can get frustrating and confusing. This type of confusion can cause someone to accidently miss a payment which results into a huge problem. One can be with their credit card company and never miss a payment, but the one time that they do the interest rate skyrockets as well as the minimum payment. When doing debt management one receives just one low payment once a month for all debts.
Three, one's credit score should be taken very seriously and maintained to the best of their ability. When receiving a debt consolidation loan one is risking their credit and assets. When doing the debt settlement program one is also taking a hit to their credit. Bankruptcy will basically destroy ones credit for many, many years. The debt management program is in no way reported to the credit bureaus. In time due to principal balances going down ones credit will actually improve. In fact this is exactly what all consumers are trying to accomplish paying off their debts not paying off 20 years of interest rates. They had no problem accruing the debt and have no problem paying the debt but to this extent it makes it impossible.
Four, the debt management plan will not hold one back from receiving more credit if needed. Credit scores will not be affected making further financial endeavors a possibility. Not only are they able to receive more credit but they do not have to add all of the cards. When doing the debt management plan you are able to keep a credit card or more for emergency purposes. This is a nice option if one decides to do so.
Five, the debt management program usually gives the consumer a lower minimum payment. This is always a very welcomed surprise to those who are struggling with their minimum payments.
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