Delinquent debts prevent you from getting financial security. They curb your purchasing power and push you towards bankruptcy. A good debt management plan (DMP) helps you to put an end to your financial struggle by paying off each debt at a reduced interest rate without spending a penny on the additional finance charges.
How DMP can help you?
A debt management plan or DMP can help you in the following ways:
· Interest rates and monthly payments are lowered.
· Late fees or over-the-limit fees are waived.
· You won't get harassing phone calls.
· A single monthly payment is required instead of multiple bills.
· Pay off debts in a predictable and shorter time frame
How do you find the right debt management company?
To find out the right debt management help company, you need to check the following:
· Company profile
· Service background
· Client testimonials
What are the 5 questions you need to ask a company?
If the debt management company you're working with is unable to solve your financial problems, then your credit score will drop, Apart from that, you'll lose money more than any other company doing precisely the similar thing.
So, it is very important to ask the right questions before signing a written agreement with the company.
1. How much will you've to pay for a fee?
2. How much will you've to pay for the monthly payments?
3. Will the counselors be able to cut down the interest rates?
4. What will happen if the monthly payment amount is too high for you?
5. How'll you know that creditors have received money?
You may have a look at the debt management faq section to know about the other questions.
What happens in a DMP?
Check out the steps in a debt management plan.
· Analysis of your finances: The debt management company helps evaluate your current financial situation. It takes into account the interest rates on your bills, total amount you owe and the minimum payment on each account. The company will want to learn about your goals and help you to achieve them.
· Negotiation to lower interest rates: Once you enroll with a debt management services, the company works on your behalf to lower the interest rates and monthly payments to your creditors.
· Suitable repayment plan: The debt management company works out a repayment plan with your creditors so that you can pay back your balances. Managing debt this way in non-confrontational and creates a predictable path to financial freedom.
· Single monthly payment: You'll make a single monthly payment to the company. The company then disburses the payment to your creditors.
What are the tips to a successful DMP?
There are 7 tips you need to follow when you manage debts with a debt management plan or program.
1. Accept a plan only if you can afford it: If a debt management company proposes a repayment plan which you can't afford to follow, it is likely your income and expenses are not a good fit for a DMP
2. Get everything in writing: Get the terms and conditions in writing. Verify the monthly fees and duration of the program before you sign the agreement.
3. Get the DMP approved by creditors: Once you enroll in a debt management plan with a credit counseling agency, make sure the proposed plan is approved by your creditors and that payments are being applied correctly by reviewing the normal monthly statements your creditors will continue to send you while on the plan.
4. Make regular payments: When you enroll in a debt management plan make your monthly payment on time. Missing a payment will cause you to lose the benefits of the plan.
5. Make sure the fees aren't high: Fees charged by credit counseling organizations for debt management programs are heavily regulated in virtually every state. Fees can range between zero and 50 dollars a month.
6. Keep track of your payments: Make sure the company doesn't send late payments to your creditors. Open all of your monthly statements and verify payments are made timely and the payments are being applied correctly.
Stick to the plan if you really want to get a financially stable life. You may face some minor inconveniences when you're in the debt management plan. However, if you really love your family, then you've to accept them without any grudge.