Who Should Consider a Debt Management Plan?
First, let’s talk about what a debt management plan is. A debt management plan is offered to individuals by credit counseling agencies. The individuals simply contact an agency and speak with a credit counselor. The credit counselor will ask pertinent questions regarding their personal finances including what is their income, the amount of debt they owe, how many credit cards they own, etc.
The benefits of a debt management plan become apparent after the credit counselor speaks with a person’s creditors. The credit counselor negotiates with creditors to establish a payment plan, which is deemed manageable for the person in debt. The person may also benefit from reduced fees, or canceled fees, and reduced interest rates. The payments are made to the credit counseling agency, and the agency makes the payments to the creditors each month.
Another advantage to the person in credit card debt is that many creditors view enrolling in a debt management plan as a positive – the person is making a planned effort to solve their debt problem. The credit counseling agency also provides clients with meaningful guidance on the proper way to use credit cards, generating a budget, paying bills on time, and managing their personal finances to promote financial health.
Now, after digesting this information, it’s time to figure out who should consider a debt management plan. A person should consider the plan if they:
- Can't pay the minimums on their credit cards
- Are consistently late paying one or more of their regular bills
- Are being hounded by creditors and collection agencies
- Have failed to work out reasonable repayment plans with their creditors
Here is a warning to those who insist on not making a timely decision regarding their personal finances and debt: Don’t' procrastinate; if a person needs help they should act immediately, because if they become too overwhelmed by their debt, a debt managementcredit counseling agency may not be able to help them.
Also, keep this in mind -- a debt management plan does not work miracles and it will not wipe your credit card debt out overnight. It usually takes people a large period of time to build up their debt, and it might take longer to make it go away. The typical debt management plan takes 36 to 60 months to complete. Responsible credit counselors say bankruptcy is usually the better option if the debt management plan would take more than five years to eliminate all debt.
So don’t wait. Contact a credit counselor at Consolidated Credit Counseling Services by calling 1-800-320-9929 to find out if a debt management plan is right for you.
