Debt Management | Debt Management Plan

Debt Management. Is it something you are considering?

Before you even think about enrolling on a Debt Managenent Plan, you need to first think about seeking initial advice from a certified credit counselor.

They will evaluate your financial situation and usually give you a free review. This will include a detailed analysis of your current income, all your assets, expenses, bills and debts accrued.

With these facts established, they will scrutinise your finances as a whole and then suggest a number of options open to you. These options will be based on your financial situation and will be tailored to your goals.

At this stage it may be suggested that a debt management plan could be your best option.

What is a Debt Management Plan?

A debt management plan requires that you deposit a set amount of money each month with a credit counseling organization. This money is then used to pay your debts, like outstanding loans, credit cards, store cards and so on...
The counselor will develop a schedule that is agreeable to both you and your creditors.

With a credit counselor on board, you could get your interest rates lowered from your creditors and certain fees waived altogether. However, you will have to agree to make regular payments and they must be on time every month.

Your credit counselor should be able to estimate how long you will be on the debt management plan. This will give you something to aim for  (if you have a set goal, it will give you more inspiration to carry on). There may be a clause however, that requires you abstain from applying for or incurring any additional credit whilst on the debt management plan.

Finally, there are a few things that you need to watch out for when looking for debt management.

1) If a credit counseling organization charges high fees payable upfront, avoid them!

2) If you are asked for any personal financial info such as account numbers, credit card details etc, before they will send their free information, avoid them!

3) If they try to get you onto a debt management program before they have reviewed your financial situation, avoid them!

In any walk of life, there are unscrupulous types, and the debt management industry is no different, so just be cautious and ask the right questions when you initially start your search. A good organization could be worth their weight in gold, they could end up saving you a whole load of money, and get you on the debt road to recovery.