Debt Management Plan
For consumers who are interested in getting out of debt, a debt management plan is a wise choice. A debt management plan is offered by credit counselling agencies or online debt management companies to qualified consumers who need help managing their debt. In addition to the benefits provided by the debt management plan, they also provide budgeting education and advice. These companies are able to negotiate with your creditors, on your behalf, to lower the interest rates on your debts. Enrollment in a debt management program will reduce your monthly payments to creditors, keep you from being sued by creditors for non-payment, and will help get you out of debt quicker. Your responsibility is to make one monthly payment to the company providing you with the services.
Only unsecured debt can be incorporated into a debt management program. Examples are:
- online debts
- credit card bills, and
- payday loans (and similar services). However, payday loans may not be covered by all companies.
- medical/dental bills
Before choosing a company find out first which debts they cover. They will negotiate with your creditors on your behalf. A debt management program may be the right solution for consumers who have tried negotiating with creditors on their own, have multiple bills they cannot properly manage, or are receiving collection calls.
If you decide to apply and qualify for a debt management program, what is the actual process to help you get rid of your debt?
- The company will first analyze and evaluate your current financial situation; it
takes into account interest on your bills, total amount owed, and your minimum payments.
- The next step is negotiating with your creditors. After terms have been agreed upon,
they will setup a repayment plan with your creditors, and the management of your
debts will be much easier.
- Lastly, you will send the consolidated payment to the company you choose, which in turn pays off your creditors; the process typically lasts 3 to 5 years.
If you are in any of the situations listed above, and are looking for an easier way to manage your debts, which doesn't affect your credit like other options might, a debt management program is a great alternative.
| Coping with Financial Stress | |
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If you're under financial stress, you may be arguing with your spouse or family members about money, experiencing headaches or panic attacks, hiding bills or receipts from family members, or finding it difficult to sleep at night. Your eating habits may have gone south, and you may find it hard to make it through the day. Use this guide to help you deal with your stress. |
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