Debt is most likely one of the biggest financial problems of the new century. There are many different types of debt. In fact, every person’s situation is unique and so the solutions are going to be different. People with different professions, at different stages of their lives are experiencing debt problems in different ways. Below, we will discuss what debt is, how can you manage your debt with a debt management plan and what are the debt management options for military veterans.
What is debt?
Nowadays, it is almost impossible to find a person who has not encountered debt at some point in his life. Debt is basically something that you owe. In most cases, having a debt means owing money to a financial institution. However, sometimes that debt may be in the form of property like a car for instance, or that debt may be in the form of services.
Different types of debt
Like we have already mentioned, there are many different types of debt. It all depends on the specific financial situation. However, there are some debt types that pop out most often and that many American citizens are experiencing problems with. These most common debt types include:
Credit card debt
Student loans debt
Car title debt
Dealing with debt
The truth is that there are actually many things a person can do to get rid of his debts. However, the fact that despite all the different tools and methods for getting rid of debt, debt is becoming more and more of an issue. This only means that getting rid of debt is an extremely hard thing to do. With that being said, it is definitely not an impossible task and we are going to explore some ways that you may be able to complete that task. Let’s dive into debt management plans and see how they can help you.
Debt management plans
The first thing you need to understand about debt management plans is that a debt management plan is not the same thing as a loan. What debt management companies do is that they work on your behalf with the creditors whom you owe money to lower the interest rate on your debts and monthly payment. It will also reduce or waive any penalties that you might have. All parties involved need to come to an agreement over a scheduled payment period which will allow you to repay your current debts within a time period of 3 to 5 years.
Debt management plans are designed with the purpose of helping people, especially those with unsecured debts to be able to once again have control over their finances.
What is an unsecured debt?
Unsecured debts are loans that you have taken out without using any of your property as a collateral for the loan. Unsecured debts include student loans, medical bills, credit cards and others.
What can a debt management plan do for you?
With a debt management plan, you may be able to not only reduce the number of payments that you need to make each month, the interest rate that you are paying on these payments but also to get rid of your debts faster that you would do without a debt management plan. Every financial decision should be made with caution. If you are considering a debt management plan as your way for regaining your financial control, let’s look at some of the advantages that debt management plans have to offer.
Debt management plans advantages
Debt management plans are services that can really make a positive impact on your financial life and the following benefits are an obvious proof of that:
- Using a debt management plan service can help you make a monthly budget that can realistically enable you to achieve your goal
- With a debt management plan, you are highly unlikely to ever miss or be late with a payment
- A debt management plan can help you put your payments and bills in order
- By using a debt management plan, you will stop the stressful collection calls from creditors
Debt consolidation loan options for military personnel and veterans
If you are searching for a way to reduce your overall debt, getting information on the exact amount of interest that you are paying on your debts can be a good place to start. After you have the details of the interest rates that you are currently paying, compare your interest rates, especially those on your credit card debts, with the interest rates that you would get with a personal loan.
Personal loans normally have significantly lower interest rates. This means that with a personal loan, you would be able to save a good amount of money. If you are able to back up that personal loan with a collateral, you will definitely be able to qualify for significantly better loan terms. However, using property as a collateral for a personal loan always has its risks. If you are unable to repay the loan on time, you may lose that property.
There are many financial institutions in the loan lending industry that offer personal loans as a way to consolidate multiple debts into a single loan and repay those debts all at once. That way, you are going to have just a single monthly payment instead of having to keep track of multiple different bills. That payment is most likely going to be lower compared to the overall amount that you are paying for all your bills.
How can veterans consolidate their debts?
Many veterans believe that it is going to be really difficult to qualify for a personal loan because most of them have poor credit scores. However, this is far from the truth. Nowadays, there are numerous credit unions, banks, and private loan lending institutions that are absolutely aware of the many financial difficulties that veterans out there are experiencing and they welcome these veterans as customers. In the beginning of this year, the average advertised interest rates were pretty low, getting to 6%, depending on your credit score. The military lending act of 2007 had capped the interest rates on personal loans at 36%.
Online personal loans
Veterans can also explore and take advantage of the numerous personal loan options that are available online. In recent years, online loan lending companies have become really aggressive when it comes to interest rates offerings.
If the interest rate that has been offered to you for a personal loan does not work for your specific financial situation or if you simply do not want to take out a personal loan, you could always get help from a credit counseling organization. It would be better if it is a non-profit one. A counseling session can really help you get better understanding of your situation and the opportunities which you can pursue. A credit counselor can help you set up a monthly budget, as well as guide you through different options for debt relief.
Debt management programs
A good debt relief option that you may want to consider is a debt management program. With a debt management program, you may be able to get rid of your debt, improve the state of your credit score and with that, get some of this financial stress off of your shoulders.