Pros and cons of consolidating loans

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A debt management plan (DMP) is a strategic effort to eliminate unsecured debt such as credit cards and medical bills.

A program will educate you on how to successfully manage your debt.

He or she will work with your creditors to negotiate interest rates and to come up with a payment schedule, which you will review and approve before beginning the plan.

Once it is determined how much money is left after basic living costs like rent, mortgage, utility bills, secured loans and living expenses are paid, the remaining amount can be divided among creditors.

Some companies will allow you to retain one credit card for emergency, travel or business use.

The good news is that credit card companies are eager to renew a relationship with you when you complete the program.

The Federal Trade Commission (FTC) recommends finding a reputable credit counseling organization that uses certified counselors trained in consumer credit and debt management.

They can help manage debt as well as develop a practical budget.

If you are interested in participating, it is best to go online to research the best debt management companies and find one you are comfortable using.An unsecured debt is one that is not backed by collateral, and includes credit cards, medical bills and student loans.It is one of several ways you can take control of your debt and reduces the number of payments you make each month and can save you money in interest and fees.There are nonprofit and for-profit companies that offer DMPs.The nonprofits are considered more reliable because their credit counselors are trained and certified by the very respected National Foundation for Credit Counseling.

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