Do debt reduction plans work? The answer to that question has to be maybe. It depends on your personal circumstances, how good the plan is and probably most of all your motivation to succeed.
1) Your personal circumstances:
If you have only started to have financial difficulties then you have a much better chance of success than someone who has been ignoring the problem for a while. Tackling the problem head on will impress your creditors much quicker than ignoring the problem hoping it will disappear. What has caused your current situation? Have you lost your income or perhaps your boss has imposed a pay cut or cut down on overtime. If the situation has been going on for a while, it is still not too late to take a grip on your personal finances. There is a way out of most problems but sometimes we need external help to find it.
You need to educate yourself first. You need to sit down and draw up a full financial budget. This means listing all of your income and outgoings on one page be it on paper or an excel spreadsheet. You could access various debt consolidation programs but before you go down this route you should know what you are facing. Look around your home and see what assets you own. You may be able to sell some stuff in order to generate some emergency cash to placate your creditors. Do not pay the money you owe based on who screams or hassles you the most. There is a set way to repay debt and you must follow this plan.
2) How good the plan is:
A debt reduction planner can be a useful tool but only when written by someone who understands how the debt repayment process should work. There are certain debts which are a priority i.e. your mortgage and your taxes. These payments should be maintained at all costs and certainly before any credit card payments or personal unsecured loan repayments. A debt reduction plan should work through a process i.e. a full income and expenditure statement together with a list of your debts. This list should include the amount you owe, the current repayments, the interest rates and details of any other charges that are applicable. If you are already in arrears, this figure should also be included. It is only when you can see the full situation can you find a way out of it. No matter what type of debt counseling program you choose, they will need this information.
3) Your personal motivation:
No debt consolidation reduction plan will work unless you are motivated to succeed. There is no magic wand available to get those debts repaid. You will need to generate more cash either by working a second or perhaps a third job or by selling some things you own. It may even take a combination of both. It isn't easy to face your problems but with determination and hard work and perhaps a little luck you can get through this.
Now you know part of what is involved in debt reduction plans. Hopefully you have found that you can generate some additional cash and get your finances under control.
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