Debt Management Plan and other Debt Payment Alternatives

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Debt Management Plan and other Debt Payment Alternatives

Debts can get out of control swiftly. A lot of people learn this the hard way. One particular and effective method of paying off your non-priority creditors is through a debt plan (DMP).

DMP is part of credit guidance service. This type of counseling is available to buyers who have trouble with repayment of their debts, and include services such as:

Money management classes
Budget counselling
Referrals to related helpful services
Housing counseling
Debt guidance

When you ask for assistance using a DMP, a credit card debt counselor will compute a realistic amount of money you could afford to pay month-to-month after paying off your own priority debts. Priority debts are those bad debts where non-payment will give creditors the right to sue you, or confiscate any of your properties.

Usually, when you are through a DMP, here is what you can expect:

A credit counselor is likely to make a full assessment of the financial situation. You will be inspired to provide information for example your monthly earnings and expenditure, creditors, and other related things.

Based on the information you gave, your credit counselor can come up with a financial statement, which will then determine how much money you can spend monthly to pay off your financial situation.

Your counselor will likely then approach your financial institution and negotiate to get a reduced payment. Most of the time, creditors will be very happy to agree to something that can help you pay off your debts for them, especially if the monthly determine you will be able to pay is really a realistic figure to suit your needs. The more realistic it is, the more sustainable it will be.

You make your monthly obligations.

Once in a while your credit counselor will assess your situation and check to see if your own monthly payment is still appropriate to your circumstances.

You may continue paying from the DMP until you have cleared your debts, or you may also choose to voluntarily end that.

To make sure that you are getting the proper kind of quality program from a credit counseling organization, check the following requirements:

Is it an accredited as well as nonprofit agency? – The minimum prerequisite you should look for in the credit counseling agency is that it is a registered not for profit agency.

Do they use certified counselors? many credit counseling agencies possess in-house training programs, however its best if their counselors also approved certification exams to test their knowledge within areas such as cost management, bankruptcy, consumer law, and so on.

Do they provide a different list of debt management options?

Do they charge sensible fees? Most credit guidance agencies do not charge people for their solutions, and put 100% of their monthly obligations towards their debts. Several would charge a minor monthly fee for applying DMP. If you decide to go with a great agencys DMP, make sure that you have all the agreements regarding costs into writing.

Are they transparent with their declaration of fees and providers? Determine if the company provides you with the information you need with out asking for financial info from you first. The business must also be able to show you a record of all the payments you made and your leftover balances.

Do they have the clean business document? You may check this information with the Better Business Bureau (or perhaps similar government agencies in your country) to find out if there has ever been any complaint filed against the agency.

There are many sources available online to help you with finding the right Debt Management Plan which will work for you.

Comments: 24

  1. Trang January 27, 2013 at 12:23 am Reply

    Okay and so i known as tca to obtain assist with my debt. It may sound great. Obviously they merely let me know the great stuff. Anybody anything about this?? Is iy harmful to ur credit?? Would i truly benefit??

  2. Gale April 16, 2013 at 10:48 pm Reply

    I am going to be starting a debt management plan with CCCS this month with a payment due on March 20th…should I pay my credit cards for the month? I am not sure I can afford the credit card payments and a debt management payment in the same month without skipping payments on utilities but I don’t want to ruin my credit either. Any help is appreciated!

  3. Marcia June 5, 2013 at 6:45 am Reply

    I am in alot of debt and have been with this company for a few years, they say that if I save up a set amount they will use this to then negotiate a one off lump sum payment to the companies I owe money to, hence writing off up to 70% and ending this situation once and for all. I am now close to having the amount Spectrum wanted me to save and I’m now nervous, just say this doesn’t work? What if my money disappears?

    Anyway I was just wondering if anyone has used them before or knows of anyone that has, I’d appreciate any stories/advice.

    Thanks

  4. Jeffrey June 11, 2013 at 10:11 pm Reply

    i owe 8000 and am on debt management plan paying70 a month to my creditors will that barr me from joining? i have rung various offices and have had different answers can anyone help?

  5. Hellen August 28, 2013 at 12:06 pm Reply

    I’m just looking for some extra change, so how can I make 5+ dollars a day online without having to invest or sell anything?

    Please don’t sugesst Treasure Trooper or Surveysavvy as I’ve already tried these and they both failed.

  6. Cleopatra September 5, 2013 at 11:39 pm Reply

    What do I need to do to go bankrupt? Will I lose my house? What about my family I don’t no what to do. What will happen to me when I’m bankrupt? How long will it take for me to bankrupt and what about my job? Can I still have a bank account?

  7. Nieves September 11, 2013 at 1:15 pm Reply

    I can’t get a loan without a co-signer and unfortunately I don’t have access to one for miles. I’m trying to get back into a SUNY school who screwed me over on a medical leave so now I owe over 6 grand of unpaid balances to the NYS attorney general where the school sent the bill to be collected legally. I’ve tried everything from a salliemae loan to an alternative loan from my local bank, everything requires a co-signer which I do not have. I’m currently looking up debt consolidation web links for help ASAP. Any other help would be GREATLY appreciated.

    Thanks for reading all of this, I really want to go back to school and it’s very frustrationg dealing with so many financial difficulties.

  8. Chadwick October 13, 2013 at 2:00 am Reply

    Ok little quick history of myself,

    I am 26 living with my parents, I have approx 18 thousand pounds of Debt combination of Credit cards and loans, It got out of hand when I lost my job a few years ago, Whilst I was in a IVA, so unfortunatley that was a disaster,

    I have to move out my parents place in the next few months, I live in Central london, I only earn approx £900 After tax a month, And my rent will be at least £400 a month, add bills to this and transport food, it really doesn’t leave me any left over to do a Debt management plan or another IVA,

    Plus every company I call I do not trust they want to pressure me into a IVA or a debt managment plan, I can’t afford to be paying £200+ a month to these companies, I simply can not afford it.

    So I can only see bankruptcy as an option, The internet is really unhelpful with information as all the information sites have a hidden agenda and are attached to a company.

    Thanks
    Adam

  9. Meta November 5, 2013 at 2:46 pm Reply

    We are both in full-time jobs, earning £40-50k a year each and have a deposit of £30k+ (perhaps even £40K). My boyfriend has a perfect credit record, however mine is suffering from stupid mistakes made years ago resulting in ccj’s and all sorts… I have a payment plan now and am paying off the debts, but I am certain we are going to get refused a mortgage based on my own stupidity, despite it being agreed in principle.

    What can I expect?

  10. Luke February 2, 2014 at 1:32 pm Reply

    I want to work with a debt consolidation company that pays off the debt on your credit report quickly and have you pay them monthly. I do not want a consolidation company that only pays the collectors as you pay them.

  11. Cleveland February 22, 2014 at 3:16 am Reply

    Hi, i recently agreed to a 24 month contract with freedom fidelity who is formerly known as freedom financial management. I have been sued now by one of my creditors but when i contacted them they said if i follow there directions they can get the court to possibly default and possibly settle with the creditor. I was recently told that the company I am working with is a scam, but i’m not sure what i should do. What they tell me sounds legit, and say that after the 2 years they will be able to settle and wipe away my debt. Now I did research and apparently there have been 38 complaints filed at the BBB site. but all the complaints were people who pulled out really early and has serious issues that I haven’t faced with the company. Freedom Fidelity has been pretty kind to me about the whole situation which is completely different from what everyone makes them out to be. What I want to know is if you guys think this company sounds really fishy and if i should pull out? Also with what they have told me, is it possible for a company to get me out of $14000 debt for only $7000. Is this just a scam to get my money or are there really companies out there who use this system in helping people out of debt.

  12. Aura February 22, 2014 at 3:16 am Reply

    so i finished my applications for CSULB, CSULA, and CSU Fullerton
    I have to pay all 3 of these colleges with a check
    and the direction says to write my confirmation code on the face of the check and i have no idea where to write it..

  13. Tristan February 22, 2014 at 3:16 am Reply

    as i am struggling to pay a loan plus other cards i have i was wondering would a debt management plan be a better option
    i owe about 22,000 icant get a loan for that much what are my options other than debt management i dont want more credit

  14. Glynis February 22, 2014 at 5:38 am Reply

    Has anyone been on a dept management plan ? How do they work ? And how does it affect your credit? thanks

  15. Gregg February 22, 2014 at 5:51 am Reply

    Hi there, I have a huge problem in the form of my ex and was wondering if anyone is able to offer constructive advice.

    Following divorce last year it was agreed that I would move out of the family home and he would stay with the children (I was working away from home at the time) The divorce was done ourselves, at the time it all seemed pretty simple and as we agreed with everything and were amicable there seemed no need to involve solicitors. I continued to pay a weekly sum to my ex for provisions for the children and a contribution towards their living costs and bills etc. I knew my ex had issues with credit cards but he had told me he was on a debt management plan and everything was getting better, he seemed happy. Anyway, last month I was rejected for a loan so looked up my credit record to find out why, and discovered my ex hadnt paid the mortgage since christmas. By this point I was living with my parents so i collected my children from nursery while he was in work and moved them in with me. They now go to nursery school by my parents house, are registered with the doctor here and are settled and happy.

    I told my exs dad about the issues and he took my ex to the CAB who has now said the only option he has is to go bankrupt but because we have joint debts (the house and a few loans) then I have to go bankrupt too. If I dont then my ex cant even afford to cover his half of the secure debt as well as being able to live and as far as i understand if we both go bankrupt then the secure debt would become unsecure and then written off.

    I do not want to go bankrupt, I work self employed and am scared this will be affected and I only have minimal unsecure debt of my own. I earn a good wage averaged over the year and since im now on the electoral role at my parents I think they will be affected by it too?

    Im so sorry this is long but if anyone has any words of wisdom it would be much appreciated. Is there any alternative to me going bankrupt? The house is deeply in negative equity and is soon to be empty, would I be able to rent it out even though my ex is named on it? I cannot move back there as it is far away from my parents and I need their support to look after the children while I work (I work lots of evenings and weekends)

    Thanks

  16. Elbert February 22, 2014 at 6:00 am Reply

    I know saving is important. But I also want to enjoy life. I am a single young adult without kids, its great. I love to travel, i get ample vacation, i love to have experiences, enjoy good wine, good food, ettc. Most things costs a handful of money especially travel. How do I find the middle ground, I want to save for a house, retirement, etc, but I also wan to enjoy my life especially my 20s very well.

    If I have 1000 extra a month after all bills and expenses, what should go to savings?? What should go to travel? To entertainment and parties, etc things like that???

  17. Indira February 25, 2014 at 1:39 pm Reply

    Im in a really confusing situation at present.

    I have been with my partner for 5 years. I have lived with him for 2.5, In the time I wasnt living with him, his own personal debt built up.
    Which meant I began to cover more and more expenses.

    To cut a long story short, over the few years I have got 6 credit cards and 2 loans. Amounting to around £18,000. (He has seperate debt of around 20ish.
    I would like to point out, we dont really go out/live in luxury. It has been to make ends meet.
    Its got to the point where the outgoings are taking over.

    I earned £1263 after tax this month and £603 has gone out in repayments. All of his money has gone out of his account.

    Household bills/rent comes directly out of his bank account on direct debit. (never changed it when I moved in) however I pay for day to day expenses such as petrol, parking for work, food- everything else etc.

    Its now come to the point where the relationship has broken down.
    the house belongs to his brother so I would have to be the one to move out.

    I feel now bankruptcy is my only option. I cannot afford to rent alone and pay my debts aswell.

    my questions

    -What will happen- when the Official recevier sees my bank statements they dont have household direct debits going out- so will they assume my income is just surplus and make me pay into the repayments?
    – My entire circumstances have changed. the last few years spending will be completely different to going forward- I will have full responsibility for bills etc on my own.

    I just dont know what to do. or where to turn
    also how long does it take?

    with my cards/loans etc, I have never missed or been late for any payment

    I know it costs over £400 to go bankrupt, so I was thinking if I cancelled all my direct debits just before pay day, and set up a basic bank account.

    My head is so confused because I know your accounts all become frozen.

    So I was thinking on pay day do I just draw money to get by for the month

    just really confused

  18. Christian March 1, 2014 at 1:41 am Reply

    If you enter a debt management plan with a bank that you have credit card debt with, will it affect your credit report and credit score?

  19. Belle March 9, 2014 at 6:47 pm Reply

    Here in UK the Bank of England interest rate is 5.25% [approx] while in the EU it is only 4%. Does anyone know if it is possible for UK borrowers to go outside the UK and borrow for say a mortgage in the EU and thus benefit from the 1.25% interest difference? Sensible replies greatly appreciated. Thanks.

  20. Berneice March 11, 2014 at 2:26 pm Reply

    I have had a Debt Management Plan since November 2006 and I have payments arranged until March 2013 (with current payment amount). I have not missed a payment since starting the plan and I have not got myself into anymore debt. I have been renting a house with my girlfriend since April 2009 but would like to know if there is a chance of getting a mortgage? Does anyone know anywhere I can get any information on line or had any previous experience of this kind of matter? Can I get a mortgage still?
    Thanks in advance.
    Thanks to ibu guru for your answer and information. I have found your information very helpful and I take on board what you have said. However please note that I have been with my gf for nearly 14 years and we do not wish to marry at the moment. Wether we are married or not makes no difference to our relationship. For some people it might but not for us. This doesn’t make a difference to our current situation as we have been together longer than most current marriages last. I asked for information on my debt situation not your opinion on my personal life. Again thank you for the information.

  21. Stewart March 14, 2014 at 4:30 am Reply

    Anyone got any experience of debt management plans? Are they worth having or do the consequences outway the benefits?

  22. Patsy March 14, 2014 at 4:30 am Reply

    I have about 20k in credit card balances across 3-4 cards. I want to close those and transfer the balances or pay them off with a new line. I doubt I can qualify for a 20k line of credit right now because of the conditions. What is my best alternative to making this happen, does anyone know?

    can someone make as many suggestions as possible as to what options i have and any ideas on reducing the balances, etc.

    I am also curious, is there not a way to ‘close the account’ and negotatiate a pay off method with the credit card company directly ? just curious.

    i used to have a 20k line for business from wells fargo, never late, never did anything wrong. paid my balance off in one clean sweep one day and 3 weeks later they reduced my credit down to 5 k, so for the business and business purchasing needs i was never able to continue without resorting to multiple smaller cards, i want to consolidate , without doing the typical consolidating scenario as those companies are rip offs.

    can anyone make any suggestions on reducing these balances, or paying them off, or another company that is giving good credit right now , or any other ideas.

  23. Raymond March 14, 2014 at 4:30 am Reply

    I am thinking about getting credit counseling and enrolling in a debt management plan. But I want to know if it hurts your credit score. There seems to be so many scams out there right now.

  24. Milo May 21, 2014 at 3:07 pm Reply

    affect credit ratings?

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