It may seem like a good idea to hire a debt consultant and use a debt management plan (DMP) to reduce the interest rates on your credit cards and the monthly payments that you make on those cards. However, whether or not a DMP is the best course of action for you will ultimately depend on the details of your unique financial situation.
One of the advantages of a debt management plan is that it allows you to pay off your problem debts at a manageable rate, which can relieve a substantial amount of pressure from your monthly budget. However, because you are paying less each month, it may take longer and cost more to pay off your unsecured debts.
It may also be advantageous for your unsecured creditors. A debt management plan is a non-binding agreement, and your creditors are not required to accept any of the terms offered. However, if they get the DMP, they can rest assured that the borrower is making every effort to repay the amount.
Here’s a more detailed perspective on the benefits of debt consultancy.
1. Helpful credit counsellors.
Certified counsellors are available to assist you with your issues and concerns during your debt management programme. The counsellors are invested in your financial well-being and will provide you with any advice and motivation necessary to stay on track.
2. Make only one manageable monthly payment.
It can be hard to keep up with multiple monthly debts. And it can be even more difficult if you cannot stretch your budget enough to cover them. Debt management would provide loan consolidation in Singapore to turn your unsecured debt payments into a single affordable monthly fee. Your credit rating would suffer, but this may be unavoidable if you can’t repay your debts following the terms you initially agreed to. And your secured debts, such as your mortgage, would not be included in a debt management plan, so you would be responsible for paying these, along with your taxes, gas, and groceries.
Therefore, when you apply, a debt expert will assist you in determining your household budget. They will need to examine your income and expenses to ensure they know how much you can afford each month without jeopardising your ability to pay for essentials. And once you’ve both determined how much you pay each month, you can calculate how much of the remainder should go toward your unsecured debts. It is the amount you can contribute to your debt management programme.
3. Continued assistance.
Your finance team will provide assistance and direction throughout your debt consultancy service. And for any questions or concerns you might have, they are your only point of contact.
You should contact them if you’re having trouble with your debt management plan, and they will do everything possible to assist you. Your Finance Team is familiar with your Debt Management Plan and your finances in general, so they will be able to assist you in determining the best course of action each time.
4. Debt management with flexibility.
A debt consultancy service is not legally binding. It’s flexible. Consequently, if you receive a pay cut or incur an unexpected expense during your debt management plan, or if your payments increase, debt management expenses are reduced to ensure you can still afford them.
This reduction would need renegotiation with your lenders, and there’s a chance they’d reject it, so they’ll do their best to convince them that it’s your best option for continuing to make payments. And if you receive a pay increase, your debt management payments can be increased. It would enable you to pay off your unsecured debts faster!
5. Reduce interest rates.
By enrolling in a debt consultancy service, you demonstrate your commitment to paying off all of your debt. In exchange, numerous creditors are willing to reduce your interest rates and waive your late payments and over-limit fees. After accepting your DMP and receiving three consecutive payments, many creditors will even mark your delinquent account as ‘current.’ Different creditors offer different benefits, so during the free credit counselling, your counsellor will discuss your specific creditors’ provided benefits.
6. Enhance credit score.
Because every situation is different, the precise effect of a debt solution in Singapore on a credit score will vary from person to person. However, because a DMP results in the repayment of all debts without opening new lines of credit, it generally improves credit scores.
7. Reduce payoff duration.
As soon as your creditors accept the terms of your programme, your interest rates will decrease. It means that a greater proportion of your monthly payments will go toward principal repayment rather than interest. It reduces the time required to repay your debt. During your loan consolidation in Singapore, you will be provided with an estimate of how long it will take you to repay your debts if you decide to enrol in a DMP.
8. Peace of mind.
You will find solace in having and adhering to a programme that will eventually eliminate your debt. Before enrolling in a debt management programme, many clients can’t escape their stressful situations. A debt consultant assists you in regaining financial confidence and command.
9. Freedom from debt.
The primary objective of a debt management programme is to help you achieve financial independence. The DMP is a tool that, in conjunction with a budget and financial education, will assist you in escaping debt and planning for a prosperous future.
These benefits apply if you are participating in a debt management programme. And the only way to determine whether a debt management plan is appropriate for you is to have a certified credit counsellor evaluate your situation and make a recommendation. You could organise a debt management plan on your own if you’re capable of calculating how much you can afford to pay your creditors, negotiating with them, making multiple monthly payments, and dealing with problems.
For a reliable debt consultancy service, don’t shy away from calling Debt Aid today to hire their assistance! They will provide you with trustworthy consultants.