There are techniques for debt management that cut down debt without costing a bomb to the debtor. And for someone who is already reeling under debt, it makes a lot of sense to make the best use of such options. So, let’s dive a bit deeper and find out what these free debt management options are.
What are the various free debt management options available?
Free debt management comes in various packages. You need to make your choice depending upon the extent of your debts and fiscal variables as apply to your situation.
Self-driven debt management
There is no better way to solve your debt problems than taking the reins of your debts into your own hands. Moreover, it is free debt management, which is good for a person already in debt. List out your outstanding debts, and prioritize the ones that fall in high-interest zones.
Next, get down to a thorough assessment of your income and earnings from all possible sources. You should also list down any assets that you could make use of, just in case it is required.
Now, gear up to list down your entire monthly expenses and summate them to a wholesome figure. Include any loans, your living expenses and essentials while tabulating your monthly expenditure.
Run a careful analysis of your outgoings and income; and estimate the sum you will end up with at the end of each month after setting aside funds to meet your essential monthly expenditures (non-essentials should, as such, be struck-off your list). Set aside a major chunk of this sum to clearing away your debts. Start off by clearing away high-interest debts followed by debts that are relatively low-cost. You may also try to negotiate the payment terms with your creditors in order to get some extra space to maneuver your funds.
Non-profit debt management companies
Budgeting, in conjunction with a non-profit debt management company, makes a potent weapon in fighting off debts. There are many companies that work on a not-for-profit basis. So, they charge a very small fee if at all. You can get into touch with such organizations by looking for them through the Internet, through Better Business Bureau, or by way of recommendations through churches, chapels, friends and family.
A non-profit debt management company is funded by charity or is government-aided. These companies offer professional assistance through finance counselors, who are experts in finance and debt management.
These counselors take stock of your fiscal situation, and after a careful analysis draw out a debt management plan that includes a customized budget and payback plan. Prior to sketching out your payment plan, the counselors get in touch with each of your creditors and undertake negotiations on lowering the interest rates, getting a few waivers on your debts or even reducing monthly payments so as to accommodate in your monthly budget.
Once each of the creditors is in accord with the payment plan, you start issuing payments as per the plan. The payments though, are not handed directly to the creditors but are routed through the debt management company. You discharge a consolidated sum per month to the debt management company, which breaks it down and pays out individual creditors on your behalf.
The advantage that comes with debt consolidation is that you end your hassles of making more than one payment per month, and you save some money because of the lowered interest rates and reduced fees etc.
Non-profit debt management companies also offer consolidation loans at low rates of interest. If you qualify for one, you pay all your unsecured debts by using this loan. In the end, you are left with a solitary loan to clear up while simultaneously clearing away individual debts.
Debt settlement is another popular program offered by non-profit debt management companies. The counselors, instead of negotiating for lower interest rates and other variables, directly negotiate with your creditors on lowering the principal amount and total balance on your debts. Once a settlement is reached, terms for repayment are drawn out and put across to you and your creditor. You may choose to settle the negotiated debts by way of a single payment or regular monthly payments, as the case may be. In any case, an initial lump sum would need to be paid by you to the creditors.
Grants and government aid
The government, from time to time, releases grants that can be availed free of cost and used for clearing off debts. The grants are interest-free and apply to a wide spectrum of debtors – senior citizens, single mothers, corporate grants, credit cards, education etc.
All you need to do is research thoroughly and you may find the right one for you.
With an array of free debt management options, it is up to you to make the best choice available.