Paying for Debt Managers in Debt
If you have overwhelming debts, the idea of paying a debt manager to help you resolve your financial troubles may seem impossible. Many debt management services offer an initial consultation free of charge. During this consultation, you may receive advice on which approach to debt management would best suit your circumstances. If you decide to enter a debt management plan, you will typically be charged an initial fee and a monthly fee for the company’s services.
Choosing an Affordable Debt Management Plan
In order to succeed, a debt management plan must be realistic. A plan that does not accommodate your income and your basic costs of living is virtually guaranteed to fail. If a debt management company’s service fees are unaffordable, then the terms of the plan are not practical for your circumstances. A reliable debt manager service will work within your means to find a acceptable solution that’s tailored to your needs.
If you and your spouse or partner have a regular income and you are currently coping with your necessary expenditures, the cost of a debt management plan may be worth cutting costs in other areas of your budget. Debt managers can assist you by developing repayment plans and negotiating more affordable terms with your creditors. Whilst the cost of a debt management plan will add to your monthly outgoings for several years, you can shorten the term of your loans considerably.
An effective debt management plan represents an investment in your financial future. Provided you can keep up the terms of your agreement, the money you spend for a debt manager may help you regain your freedom more quickly. Over the long term, you may save quite a bit of money in principles and interest by working with a debt manager to repay your debts.
Fees for Debt Management Services
The initial fee for a debt manager typically covers the costs of developing your repayment plan, reviewing your finances to determine how much you can afford to pay each month and contacting your creditors by phone to negotiate reductions in your financial obligations. In order to pay the initial fee for a debt management service, you may need to go into arrears with your creditors. In effect, you may pay the debt manager rather than your creditors during the first month you enter the debt repayment programme.
Each month thereafter, you will be charged a much lower fee for the debt manager’s services. These services include disbursing your payments to creditors, communicating with these financial institutions by phone or mail and issuing your monthly statements. A reliable debt manager will review your account on a regular basis to ensure that you are able to keep up your repayments. If your financial circumstances change, your debt manager may attempt to negotiate new terms with your creditors.
If you choose an Individual Voluntary Arrangement, or IVA, instead of a debt management plan, you will be charged a fee for this service. The fee will depend upon your unsecured debt, the length of the repayment period and whether or not you have equity in a home. With some IVAs, home equity may be released at the end of the arrangement to pay off the remainder of the debt.
It may seem difficult or impossible to pay a debt manager when you’re already struggling with overwhelming debts. However, this expenditure may be necessary in order to achieve freedom from your financial burdens. In order to afford debt management fees, funds that were being used to pay creditors must often be diverted to a debt manager, at least temporarily.