A C C O U N T A N T S A N D B U S I N E S S A D V I S O R S
Debt rescheduling is one way to provide a borrower with relief when needed due to an economic downturn or other unforeseen personal event (i.e. job loss, illness etc.).
For example, let's say an individual decides to spend $500 every month on retiring his three sources of debt: $1,000 worth of credit card debt (annual rate of 20% interest), $1,250 of car payments (annual rate of 6% interest) and a $5,000 line of credit (annual rate of 8%). Each has a minimum payment of $50.
If the person decides to use the snowball method of debt repayment, he will spend a total of $150 on paying each debt's minimum payment ($50 x 3). The remaining $350 will be spent on a payment toward the highest interest-bearing debt - in this case, the credit card debt. Once the credit card debt has been completely paid for, the extra payment will go toward retiring the second-highest interest bearing debt (the line of credit), and the loan with the lowest rate of interest (the car loan). Let DMG assist you with your debt repayment plan.