In some cases when a person is facing ever more unmanageable debt, he or she seeks out the assistance of a debt management program or organization. In basic terms, a debt management program negotiates with creditors to work out a more reasonable plan for you to pay off existing liabilities. Typically, this includes negotiations with credit card companies and even providers of medical or health care services to whom a person owes money.
Oftentimes, once a debt management program representative negotiates with certain creditors, the consumer makes one monthly payment to the debt management company which in turns makes individual payments to creditors. A person with a home mortgage loan may wonder what impact, if any, entering into a debt management program will have on that loan.
Direct Impact on a Home Mortgage Loan
The quick answer to what affect a debt management plan has on a home mortgage loan simply is “it depends.” In some cases, a consumer needs to have a home mortgage loan included in the debt management process. This typically is the case when an individual’s combined debt truly is overwhelming. Such an individual is one step away from heading to bankruptcy court.
In such a situation, a debt management counselor or consultant may attempt to negotiate a reduction in the monthly mortgage loan payment, at least for a set period of time. If the home mortgage lender agrees to such a reduction, the monthly home mortgage loan payment will be made through the debt management organization.
In other cases, a consumer may not desire or need to have a home mortgage included in an overall debt management program. In such cases, a debt management plan will have no appreciable impact on the home mortgage loan.
Reliability of Debt Management Organization
When a person engages a debt management organization, he or she must undertake a course of due diligence at the outset to ensure that the entity is reliable. In addition, once such a service is engaged, an individual must monitor its efforts to ensure that it is making timely payments to creditors.
If a debt management organization is not making payments to creditors in a timely manner, a consumer could end up in a worse position than he or she was in prior to the start of such a plan. If the home mortgage lender is included in the mix, a person could end up faced with late fees and penalties if the debt management company does not make the monthly mortgage payments in a timely manner.
At Rescue One Financial, we can help you resolve your debt in 24 to 48 months to ensure the weight of the debt you are carrying is lifted from your shoulders in a timely manner.