If credit card debt is overwhelming you, there are a plethora of avenues for you to get out of your predicament. One such way is with a debt management plan.
While the term “debt management plan” may sound very non-specific, it is a specific debt payoff tool that helps pay off credit card debt. According to NerdWallet, debt management plans are not for everyone, but they do have a very high rate of success.
What does a debt management plan do?
With a debt management plan, the debt management plan company rolls all of your debts into one monthly payment. In addition, your creditors reduce your interest rate. Your role in this is to agree to a payment plan that lasts between 3 to 5 years.
It is possible that the debt management plan company may be able to cut your interest rate by half or even more. This process will also help you pay off your debt faster than you could alone. Having all of your debts in one single monthly payment also streamlines and simplifies the process.
What are the negatives?
A debt management plan mostly deals with credit card debt only. If you have student loans, medical debt or other tax obligations you will not be able to use a debt management plan. It also takes three to five years, which is a comparatively longer amount of time. While you are on a debt management plan, you will also not be able to open up new lines of credit. Debt management plans are not for everybody, but for the 10 to 20% of debtors who use them, over 50% succeed.