Knowhow-Now Article

Debt Management Plans – Suggesting Ways To Survive The Quagmire Of Debts

Before delving on what a debt management plan can do for you as an individual or as a business, it will be good to decide its scope. It is a misconception among many people that debt management plans can only be used for eliminating the existing mound of debts. Nevertheless, debt management plans have an extended scope. As the name suggests, debt management plans may be used with advantage to manage the debts to a particular level. It must be acknowledged that a proper management of debts makes debt consolidation and other methods employed to fight the menace of debts superfluous. Prevention is better than cure. Most of us repeat the adage incessantly. It will be through debt management plans that one can really develop the habits in ones life and dealings.

However, the role played by debt management plans in working with the debts already incurred may not be discounted. Many people owe their financial survival to the debt consolidation loans that helped them counter bankruptcy and other debt related problems.

Tip: Keep up with world money markets so you know what is happening. A lot of people tend to ignore important world news which can impact their own financial situation at home.

The author has tried to illustrate the preventive as well as defensive uses of debt management plans through this article. Since the defensive part of the debt management plan is more widely used, we will first discuss the various plans to deal with debts that an individual or business has already incurred. The various debt management plans that come in this category are as follows:

• Debt consolidation loans
The most conventional method of dealing with debts is debt consolidation loans. Debt consolidation loan is essentially meant to arrange easy finance for clearing the mound of debts. A single loan is drawn after consolidating the various debts. One aspect that distinguishes debt consolidation loan from other loans is that the borrower gets help and guidance from the debt consolidation loan provider in the settlement of debts. Expert negotiation skills and a proficiency in debt settlement recommend the services of the debt consolidation loan provider in this regard.

Tip: Never sell unless circumstances suggest it is wise. If you own stocks that are earning fair sums of money, leave them be.

• Debt consolidation mortgage
Debt consolidation mortgage constitutes a major part of the debt management plans. A debt consolidation mortgage is basically a second mortgage. In this method, the borrower requests the mortgagee who holds the first mortgage to the home to repay his debts. In exchange, the borrower includes the debts while making the monthly repayments. The advantage of the debt management plan is that finance is available for debt consolidation at rates equivalent to a mortgage, i.e. at cheap rate of interest.

• Debt consolidation through remortgage
While debt consolidation mortgage entails dealing with the same mortgage lender, debt consolidation through remortgage involves shifting to a mortgage lender who offers a better rate of interest. In this debt management plan, the borrower or the mortgagor requests the new mortgage lender to include several debts along with the unpaid amount on the original mortgage for disbursement. Again, this will help the borrower get cheaper finance for debt consolidation at the rates of a mortgage.

Tip: Married? Have the partner with the highest credit score apply for any loans. Try to improve your own credit by never carrying a balance on at least one of your cards.

• Debt consolidation through credit cards
Credit card as a debt management plan will be especially useful when the debtor wants a quicker settlement of debts. As in loans and mortgages, a credit card user need not wait for the debt management plan to be approved and sanctioned. Another advantage of credit cards as a debt management plan is that borrower is not required to pledge any of his/ her assets to back the loan. This can however be too expensive for the credit card user.

• Debt consolidation through home equity loans
Home equity loan is a secured loan taken against the equity in ones home. Home equity loans put a convenient method of debt settlement. A home equity loan is a multi-purpose loan that can be used with equal advantage whether in a debt management plan or for making home improvements. Since home equity loan is secured, it provides cheaper finance. However, the borrower needs to be regular in making repayments to protect his house from repossession.

Tip: Times are tough, try having your savings in different places! Besides maintaining balances in checking and savings accounts, invest in stocks, mutual funds, gold, and t-bills. These are all ideas on how you can safeguard your investments and money.

• Debt consolidation through debt settlement
This form of debt management plan involves associating with a debt settlement company. The debt settlement company undertakes to repay the debts while the debtor repays the amount through small monthly instalments to the debt settlement company.

As discussed above, the preventive methods are equally important tactics employed to avert the occurrence of debts. Debt counselling aims to impart debt management training to individuals as well as businesses. People are taught the manner in which to manage their revenues. Many of the tips provided as a part of the debt counselling techniques are time worn. The aim of debt counselling is not to recall these techniques, but to help people through innovative ways and means to employ these techniques in their life.

The defensive debt management plans having repaid the debts, do not give sufficient guarantee of the menace of debts not raising its head again. There is a need to end the cycle of the debts, and the preventive part of debt management plans will be especially helpful on this count.

Comments
Order by: 
Per page:
 
  • There are no comments yet
   Comment Record a video comment
 
 
 
     
Related Articles
Everybody wants to pay as little tax as possible and will take opportunities to do so. But when taxpayers try to do things illegally, the whole nation suffers. Governments can't operate without taxes.
29.06.2016 · From Editor
At first, spending with a credit card is worry free. Just a swipe is all it takes, and you have finally tasted satisfaction. The ugly part arrives when you can't pay the bill. This is where debt relief agencies come in...
12.05.2016 · From TheAuthor
Planning and putting up an owned business is hard. It is a dream of millions of people around the globe. There are a lot of people who set up their own businesses but never quite get around to it. Thi...
28.10.2015 · From thezonegroupllc
Everyone has to keep track of their finances in the world we live in today. In order to make sure that you will make good financial choices, you want to be sure to learn everything you can about it.
12.10.2015 · From Editor
Whether you want it or not, you have a relationship with money that will always be there. Because of this, you have to understand your financial life. This article outlines advice for personal finances.
12.10.2015 · From Editor
Ads
Article Info
138 Views
0 Subscribers
All Articles by LindaBrown
Sharing Is Good!
Rate
0 votes