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.
Benefits
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.
© 2004-2010 Vision Credit Education, Inc. All rights reserved.
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