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Debt Management Plan – Overview & Choosing A Good Company

November 26, 2011

Debt Management Plan

If you are unsure exactly what the point is of a debt management plan, it is basically a way to payback unsecured debt to creditors  whom you owe money to, which their goal is to get you out of debt as soon as possible, and as fast as 3 to 5 years. A debt management plan is used most often for situations like; payments that take up a large portion of your monthly income, late payments as well as when one is feeling overwhelmed with their payment plans.

debt management plan

When an individual finds themself in one of these situations they seek a third party organization who will review your particular situation and assess what can be done to help you start to gain control over what you owe. In order to do so, these organizations will assess aspects of your situation like your budget as well as your monthly and yearly income, then the organizations will attempt to renegotiate terms like how much you owe each month as well as lower interest rates. During this process they will use your income as well as the budget to create more realistic repayment terms which fit well with both the organization as well as the individual in debt.

After debt management plans are pitched to your creditors, they can either accept to regnegotiate or decline, which for the most part, they usually agree to new terms, as it will be a step forward either not being paid or always recieving late payments. When a DMP is accepted, one of the main benefits is that after a certain amount of time, you will no longer be harrassed with calls by your creditors anymore, which the calls usually cease about 1 to 3 months after one has started their debt management program.  To get your more familiar with the rules and terms of being in a debt management program, below are some of the main aspects of the DMP customer experience:

  • You do not have to include all of your debt into your debt management plan if you do not want to.
  • You can use a managment plan even if you haven’t missed a single payment, and still enjoy the benefits.
  • The DMP continues until your are completely free from debt.
  • You can also receive helping in better budgeting your expenses which is administered through a debt counseler.
  • Remember to check your statement each month to make sure your debt is being paid off to your creditors.
  • Activation fees can be reduced through negotiation, per say if you cannot afford the fee, which monthly fees are negotiable as well.

Debt Management Plan Tips

Below are details on tips that you can choose to follow which will make sure you are getting the best deal as well as avoiding scams:

  • Avoid organizations that do not pay their employees based off of whether or not they enroll you in a debt management program.
  • Get everything that needs to be signed in writing, like terms and legal information, not over the internet or phone.
  • Never pay for information about a DMP company.
  • Find out if previous customers have been happy with the service, which can be done through your staes Attorney General or the Better Business Bureau.

It is also advised that you seek out a debt management plan from an organization that either small or medium sized organization, as they deal with less people then the likes of franchises, and they can offer more personalized service and tend to be a lot more dedicated. If you are considering using a debt management plan to get yourself out of debt, or at least get a handle on your debt situation, the best thing to do would be to contact an expert that specialized in debt management. Although it costs to consult in one of these experts, what you pay can be worth it’s weight in gold because they can assess you situation and provide guidance on whether using a debt management plan will work in your favor or not, or use another debt relief method like consolidation or settlement. This will also avoid organizations who are just trying to make a sale off of you, even though it may not provide value to your debt situation.

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