Before deciding to go with a debt management plan to help you with your debt problem in personal or for your business, it will better to determine its scope. Many people have been misled by thinking that the purpose of debt management plans is only to reduce and eliminate the debts.
The truth is debt management plans have wider scope than most people think. Just like the name said, debt management plans will manage the debts to a certain level. But people should also know that proper management of debts is also employed the debt consolidation. And other methods to counteract the threat and damages from debts.
Despite this misconception from debt management plan, many people have taking the advantages from this program to save themselves from bankruptcy and many other problems that are related with debts.
In this post we will try to discuss about some other methods that is also become parts of debt management to overcome with debts that are happen whether in business or personal matter. Those debt management plan’s methods can be classified as follows:
Debt consolidation loans
This is the most common method in handling the debts from the debt management plans. Basically the debt consolidation loan is to get financial aid to clear up several amounts of debts. A person will take a single loan to consolidate several debts.
The things that make this type of loans different is that the debt consolidation loan provider. It will provide some assistance and guidance for the borrower in the debts settlement. This type of debt management method is highly recommended by many debt consolidation experts.
Debt consolidation mortgage
This method in simple term can be explained as a second mortgage. When using this method, the borrower will ask the party who has the first mortgage of the property to repay the borrower’s debts.
In return, the borrower will add that debts into their monthly repayments. The benefit from this method is that the rates from this financial aid equivalent to a mortgage.
Debt consolidation through remortgage
This method is almost the same with the previous method. The difference is the debt consolidation through remortgage does not take a remortgage from the first mortgage instead. But with different mortgage lender that provide lower interest rate.
In this method, the borrower asks the new mortgage lender to include other debts together with the unpaid debts from the original mortgage. Using this method will let the borrower to acquire a loan that has lower interest rate for the mortgage.