If you’re faced with significant financial difficulties and have spent any amount of time researching debt relief options, Debt Management Programs (DMPs) will have surfaced as one of the best alternatives to filing for bankruptcy.
Before entering any DMP scheme, however, it’s crucial to analyze whether it’s right for you.
The financial implications should naturally form the focal point of the decision-making processes.
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Debt Management Program Interest Rates
DMPs are considered one of the most popular forms of debt relief currently available, and their popularity largely stems from aspects relating to interest rates.
Debt Management Programs work on the principle of a Trustee negotiating new repayment plans that deliver lower interest rates than what you are currently paying.
Essentially, creditors accept the lower rate as to miss out on the threat of bad debt caused by your potential discharge.
They get their money and still receive some profit from interest payments while you gain a significant reduction on the interest paid over the term of the new debt management repayment plans.
Debt Management Programs often reduce total interest rates on credit card debts and other unsecured debts by up to 50%.
In turn, you are able to meet the repayments with greater ease while also clearing the debt far sooner.
Ultimately, the rate saved will be influenced by a variety of contributing factors, including but not limited to:
- How much debt is owed, the type of debt, and the current interest rates being paid;
- The total duration of the agreements as well as the remaining time on the repayment plan;
- Your credit rating and other financial background information;
- How good your Trustee is at their job and negotiating reduced repayment plans with creditors.
The rates will, therefore, vary from one case to the next, especially when the DMP negotiates new plans with several creditors.
Using an interest payment calculator will provide far clearer insights into how much can be saved.
Debt Management Program Costs
DMPs are significant financial strategies that can transform your finances without requiring a bankruptcy filing.
However, Trustees will need to spend a lot of time analyzing your situation, devising strategies, negotiating with creditors, and implementing repayment plans on your behalf.
Therefore, it is necessary to pay a fee for the sake of covering those expenses.
Bankruptcy Canada doesn’t only perform DMP processes and can facilitate an array of other financial debt relief services, which enables us to analyze all pathways on your behalf.
When a DMP is identified as the best opportunity, the comprehensive services will cost a small percentage of the savings.
However, when faced with debt to the tune of several thousand dollars, the savings will outweigh the costs several times over.
In the meantime, using a DMP calculator can help you determine the monthly repayments to understand the level of impact the strategy will bring.
Whether using a Debt Management Program or any other form of debt relief, calling Bankruptcy Canada will put you on the road to financial recovery.
To find out more, get in contact using the online form today.
Information on Consumer Proposals
Consumer Proposals in Canada – An Alternative to Bankruptcy
What is a Consumer Proposal?
How to Amend a Consumer Proposal
What are the Benefits of a Consumer Proposal?
What are the Steps in a Proposal?
Consumer Proposal Eligibility
What Debts Are Erased in a Consumer Proposal?
Is There Life After a Proposal?
How to File for Bankruptcy
What is Bankruptcy?
How Does Bankruptcy Work?
What is the Cost of Bankruptcy in Canada?
How to Rebuild Credit Following Bankruptcy
Personal Bankruptcy in Canada
What Debts are Erased in Bankruptcy?