Debt Management Plans - A Way To Survive The Debt And Come On
By Vishy Dadsetan, Thu Dec 8th

Debt Management Plans

Debt Management Plans (DMP) is placed one step beyond creditcounseling and a stone's throw short of bankruptcy. If you aretoo deep into debt and unable to pay them, a credit counselingagency may recommend Debt Management Plans. This is a seriousstep that should be considered carefully along with better moneymanagement skills and budgeting disciplines.

Similar to prescription medication that you would only takeafter consulting a licensed physician, Debt Management Plansshould start only after you have talked it over with a certifiedcredit counselor. Your certified credit counselor spends thetime to review your financial situation, consider alternatives,and help you learn to handle money better. You want to stay outof debt after you get out of it.

What is Debt Management Plans?

In simple terms, your credit counseling organization begins tomanage your debts on your behalf through direct interaction withyour creditors. They come between you and most of your unsecuredcreditors, negotiate lower interest rates, eliminate certainfees, arrange payment amounts and prioritize which creditorsgets paid first. In short, almost everything that could be doneto get you out of debt fast. These plans cover most unsecureddebts, like credit card bills, student loans, and medical bills.But secured debts such as real estate loans fall outside ofthese plans.

Before signing up with a credit counseling organization for aDMP, verify any concessions your particular creditors offer tothat organization. All these concessions from your creditorsamount to one thing: Lower your monthly payment and still getout of debt faster. In some cases, you will be able to pay youdebts, years earlier. Ask your credit counselor how much earlieryou will get out of debt if you stayed on course.

When DMP starts, you agree to send one monthly payment to thecredit counseling organization and they in turn make all thepayments to your creditors for you. In the meantime, you mayhave to agree not to use or apply for credit while you areparticipating in the plan.

Is a Debt Management Plan Right For You?

Cover the following with your credit counselor before you decideto participate in a Debt Management Plan.

Find out if there are other options besides the DMP available toyou. Is your DMP handled by the same organization that alsoprovides you assistance with money and budget management duringand after DMP? If a Debt Management Plan is handled by oneorganization and another handles your ongoing credit counseling,how will you coordinate the two? Remember you want to stay outdebt later.

Find out how enrolling in a Debt Management Plan impacts yourcredit and your credit score. Negative and accurate informationon your credit record is not easy to remove despite any promisesmade.

Confirm what your monthly payment amount is and if you canafford it. Do not commit to something you cannot follow through.

Credit counseling organization promises concessions they can getfrom your creditors, such as lowering or eliminating interestcharges and late fees. Confirm these with your creditors and seeif there is a waiting period before these concessions kick in ordo they start as soon as you enroll in a DMP.

Verify that your creditors are paid within the correct billingcycles and before their required payment due date.

Clarify the steps involved in getting status reports on youraccount from your credit counseling organization. How often? Howdetailed? Is it accessible by phone? Any hesitancy on behalf ofthe credit counseling organization to let you verify youraccount status is a big red flag that means you need to findanother organization to help you.

Find out if your creditors are willing to reset the clock onyour past-due accounts, wiping out the record of missed and latepayments if you sign up with a Debt Management Plan. Thisprocess is called re-aging your account. How many paymentsshould you make before your creditors are willing to do this?

What to do after Debt Management Plan starts?

Once you sign up with a Debt Management Plan continue to beactive with the process, even though emotionally, you may wantto wash your hands away and stay away. DMP does not relieve youof your responsibilities; it only helps you manage it better.

Keep in touch with your creditors and pay your bills until theDMP goes into effect. If you haven't had any negative entries inyour credit report by now, any late payments, late and penaltiescan still be entered into your credit report.

Contact your creditors and confirm that they have accepted theproposed Debt Management Plan before you send any payments tothe credit counseling organization for your DMP.

Call each of your creditors on the first of every month to makesure the agency has paid them on time and verify this bychecking your monthly statements. Your monthly statement shouldalso reflect any changes in your interest rates, waiving of thelate fees and any other concessions you were expecting.

May you be granted freedom from debts both physical andSpiritually.

About the author:How Much Traffic Can A Good Article Bring Your Business? VishyDadsetan writes easy to read, keyword rich, search engineoptimized articles that make sense. Articles just like this one.WebSite: http://www.freecreditreport.ws/creditcounseling.html