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Debt Management Plan As Credit Help |
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A credit help agency may recommend that you enroll in a debt management plan, if you have a problem with too much debt. A debt management plan alone is not credit help, and debt management plans are not for everyone. Consider signing on for one of these plans as credit help only after a certified credit counselor has spent time thoroughly reviewing your financial situation, and has offered you
customized advice on managing your money. You deposit money each month with the credit help organizations. The organization uses your deposits to pay your unsecured debts, like credit card bills, student loans, and medical bills, according to a payment schedule the counselor develops with you and your creditors. Your creditors may agree to lower your interest rates and waive certain fees, but check with all your creditors to be sure that they offer the concessions that a credit help organization describes to you. A successful credit help plan requires you to make regular, timely payments, and could take 48 months or longer to complete. Here are some other important questions to ask if you're considering enrolling in a debt management plan (DMP): - Is a DMP the only option they can give you as a part of credit help services? Will they provide you with on-going budgeting advice, regardless of whether you enroll in a DMP? If an organization offers only DMPs as credit help, find another credit help counseling organization that will also help you to create a budget and teach you money management skills. - How is the amount of your payment determined? What if the amount is more than you can afford? Don't sign up for a DMP if you can't afford the monthly payment. - How often can you get status reports on my accounts? Can you get access to your accounts online or by phone? Make sure that the credit help organization you sign up with is willing to provide regular, detailed statements about your account. - Do you have to make any payments to your creditors before they will accept the proposed payment plan? Some creditors require making a payment to the credit help counselor before accepting you into a DMP. If a credit counselor tells you this is so, call your creditors to verify this information before you send money to the credit help counseling agency. The following steps will help you benefit from a debt management plan, and avoid falling further into debt. - Continue to pay your bills until your creditors have approved the plan. If you stop making payments before your creditors have accepted you into a plan, you'll face late fees, penalties, and negative entries on your credit report. - Contact your creditors and confirm that they have accepted the proposed plan before you send any payments to the credit help organization for your debt management plan. - Make sure the organization's payment schedule allows your debts to be paid before they are due each month. Paying on time will help you avoid late fees and penalties. Call each of your creditors on the first of every month to make sure the agency has paid them on time. - Review monthly statements from your creditors to make sure they have received your payments. - If your debt management plan depends on your creditors agreeing to lower or eliminated interest and finance charges, or waived late fees, make sure these concessions are reflected on your statements. If you have spent any time researching the giant list of companies providing debt management as credit help, you know not all take the same approach to debt. Some favor consolidation and minimum payment plans that stretch well till the end of your life, while others seek to aggressively pursue debt settlement so you can get rid of this problem for good. The reason so many credit help corporations offer one choice or the other, not both, is because the two paths require completely different skill sets. |
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