In some situations, a debt management plan can be the best way to eliminate credit card debt. If you are looking at enrolling in a debt management plan, make sure that you seek the advice of a certified credit counselor. Finding the right credit counseling agency can help you successfully eliminate credit card debt while restoring your credit rating in the process.
Debt Management Plan
A debt management plan is a service of nonprofit credit counseling organizations as well as debt management companies that operate for a profit. It is important to find the right agency that will take the time to work out all of the important details. If the company just wants to hurry up and enroll you in a debt management plan, you should seek assistance from a different agency.
A certified credit counselor will examine your entire financial situation and work with you on developing a budget. They will help you decide what your monthly income and expenses are and evaluate your debt payments. After determining your capacity for repaying debt, they will offer options and provide advice related to those options. Remember that this is your choice, and no one knows your personal situation like you. A certified credit counselor will recognize this and will supply you with as much relevant information as is possible to help you make the best decision to protect your interests.
How it works
A debt management plan can be developed to consolidate the payments on your unsecured debt. Instead of making multiple payments throughout the month, you can have one monthly payment to cover all debts. Although you can send in a monthly check, most counselors strongly recommend setting up an automated debit or withdrawal from your checking or savings account to keep the plan on schedule. Since missed payments can jeopardize benefits, you need to keep your payment history consistent. The credit counseling organization will disburse those funds to your creditors on your behalf.
A certified credit counselor will work with you to identify the best payment date based upon your paydays and the due dates on each account. They will recommend different options that will ensure that you prevent further damage from missed or late payments.
A credit counseling organization will represent your best interests while acting as a liaison between you and your creditors. They will attempt to work out a compromise where your creditors would reduce your interest rates, reduce your minimum payments, waive late and over-the-limit fees and re-age any past due accounts. Re-aging an account refers to resetting your minimum payment to a much smaller amount to allow you to re-establish current status and avoid further penalties.
When you have shown signs of weakness, creditors will typically only grant these benefits when you have established a debt management plan. They recognize your hardship situation and will allow you to eliminate credit card debt through this structured repayment program.
Getting and maintaining these benefits are only possible if you maintain a consistent payment history and follow the guidelines of the debt management plan. Your creditors frequently will grant you these benefits as long as you make a commitment to eliminate credit card debt and to avoid obtaining additional debt while on the program. If you think a debt management plan might be for you, seek a reputable nonprofit credit counseling agency that will help you examine your situation and options.