Debt Management Plans
If an individual faces an overwhelming amount of debt or inability to repay
their debts, a credit counseling agency may recommend that they enroll
in a debt management plan. In a debt management plan, the debtor deposits
money each month with the credit counseling organization, which will use
their deposits to pay the unsecured debts like credit card bills, student
loans, and medical bills, according to a payment schedule the counselor
develops with the person and their creditors. A successful debt management
plan requires regular, timely payments and could take 48 months or longer
If a debt management plan is appropriate, it is best to sign up for one
that allows all the creditors to be paid before the payment due dates
and within the correct billing cycle. It is also important to clarify
which debts will not be included in the debt management plan, because
the person will have to pay those bills on their own.
Debt Consolidation Loans
If an individual’s debt load is larger than $10,000, they might qualify
for a debt consolidation loan in Florida. These credit facilities are
designed to pay off existing creditors and roll debts into an easy-to-understand
loan. Instead of dealing with multiple banks and credit card companies,
the debtor just has a single lender to pay off each month.
Debt consolidation could be worth investigating with a debt management
attorney as a potential relief option. Debt consolidation may simplify
the debt repayment process, and if a reasonable interest rate is secured,
could make the debt resolution far less stressful.
Be wary that even if a person is able to find a lender, the loan may be
difficult to pay off. Many sub-prime debt consolidation loans come with
interest rates of 15% or more and are thus more desirable for debtors
with solid credit.
Secured Consolidation Loans
Most consolidation loans are secured, meaning they require collateral, e.g., a
high-value asset such as a home or a car. A secured loan can help a person get a lower
interest rate, which means they will pay less over time.
However, if the debtor does fall behind or can’t make their payments,
they will be in danger of losing their leveraged asset. In other words,
their house could be foreclosed on or their car seized.
Unsecured Consolidation Loans
An unsecured loan is harder to come by and usually carries higher interest
rates. This is because the lending company doesn’t have any guarantee
that a person will repay the entire loan.
While an unsecured loan could simplify the repayment process, such a loan
could lead to a greater amount of debt in the long run. It is best to
discuss with an experienced debt relief attorney to determine which option
is best for an individual’s unique circumstances, taking into account
their past and future financial status.
(561) 220-2528 or contact her firm
online to learn more about how she can help you manage your debts.