Why Choose a Debt Management Plan?
A debt management plan or program (often abbreviated DMP) allows you to consolidate your unsecured credit card debts into one monthly payment that’s more manageable for your monthly finances. However depending on your situation, a DMP may not be your only option when it comes to finding relief from debt. So how do you know if a debt management plan is the best option and when does it make sense for your finances?
Every situation is different, but there are some common signs that debt management may be the best solution if you need debt relief. To find out what’s right for your own unique financial situation, give us a call at 1-800-320-9929 and speak with a certified credit counselor for free. They can assess your budget and your debts at no charge to help determine if a debt management plan is the right option for you. You can also get started online with a Free Debt Analysis.
The advantages of a debt management plan
While you have a number of options if you’re looking at debt consolidation, a debt management plan offers several advantages all its own. The first advantage is that you don’t need a strong credit rating to qualify for the program. With some debt consolidation solutions you need a good credit score to make them viable debt relief options, such as a personal debt consolidation loan where you need to qualify for a good interest rate to actually see a benefit. A debt management plan is a viable option for relief even if you have bad credit.
Another advantage is that once you’re enrolled in a DMP, the credit counseling agency may be able to stop any further credit rating decline on your credit from late or missed credit card debt payments. Some clients have even seen an improvement in their credit scores upon successfully completing the program. The big advantage, of course, is a debt management plan helps you avoid the harsh penalties of debt settlement or bankruptcy that can stay on your credit report up to 7 years.
In addition to helping you avoid financial disaster though, the best benefit of a debt management plan is how much money it can help you save on your debt. With an interest rate that’s so much lower on all your debts you pay much less in total interest payments. You pay less in interest, even though you still pay your debts back in-full. You also get completely debt-free in a fraction of the time.
How do I know when I need a DMP?
Every situation is different, but there are a few warning signs to look for that will help you determine if a debt management plan can provide the relief you need:
- If your debt-to-income ratio is 42% or more. This generally means you’re carrying
more debt than your monthly finances can handle. Even if your debt-to-income ratio
is in the low 40’s and you feel like you’re staying afloat, one unforeseen expenses
like a trip to the ER could send your finances spiraling out of control. If your
ratio is more than 50%, don’t wait—call us at 1-800-320-9929 to discuss your options
- If you can’t afford OR can barely afford your monthly bills; often, payments
may be late as you wait for money to come in. Juggling bill payments is a sure
sign you need debt relief. What’s more if you’re already making late payments, your
credit score may already be in decline, which can limit your debt relief options.
Don’t wait for your accounts to go delinquent or be sent to collections—take a Free Debt
Analysis now to weigh your options.
- If you pay your minimum monthly payments, but your credit card balances never seem to go down. This can be caused by any number of factors from high interest rates to high account balances, but in the end it means the same thing—you’re not making any headway with your debt. If you can’t get ahead doing what you’re doing then it’s time to seek help.
What you’ll get with a debt management plan
The first and best thing you get from a DMP is getting completely free of your credit card debts. It typically takes around 36 to 60 payments through a DMP to completely eliminate your credit card debt. No more collection calls, no more hefty monthly payments—just a happy debt-free life and the foundation you need to build a strong financial standing for you and your family.
You also get a positive boost to your credit repayment history with all the payments you make to complete your debt management program. Your repayment history is a main factor in determining your credit scores, so building a positive repayment history through a debt management plan can be a good benefit for your finances overall. In addition, if your accounts were delinquent because of late or missed payments, any accounts you put in your DMP will usually start showing current in about 3-5 payments.
If you want to learn more about the benefits of a debt management plan or you’d like to get a free debt consultation to see if debt management is right for you, give us a call at 1-800-320-9929 to speak with a certified credit counselor or get started online with our Free Debt Analysis form.