Debt Consolidation

How To Succeed With Debt Management Programs?

There are hundreds of debt management programs (DMPs) available out there, each of them claiming to be the best option to handle your debt situation, but obviously not all of them make a suitable choice for you. There are plenty of factors that you need to work on before you sign up with a specific program. But again, just signing up with a good program is not enough. You must show some great financial discipline in order to make this debt relief option work for your specific situation. DMPs became popular after the introduction of the new bankruptcy laws in the year 2005. But, because of fraudulent activities and poor management, many of those businesses have now gone out of business. It also means that the hundreds of companies that are currently in this type of business may include lots of unscrupulous organizations also. Therefore, you have to be very careful when it comes to choosing the right program. You can follow these tips to choose the most suitable program and then to make the most of it.

Choose A Reputable, Well-Established Program

The first thing you have to do is to choose some reputable, well-established debt management programs and then do a thorough comparison shopping. Different programs work differently and they use different methods. So, you must compare them thoroughly to find out which one can be the most suitable for your specific situation. Make sure you do a background check of the company you are signing up with. You can check their past records with the State Attorney General’s Office of Consumer Affair and with the Better Business Bureau. You obviously should avoid those companies that have lots of consumer complaints against them.

Sign A Written Contract

Do not believe every word that debt management companies say. Never go for verbal insurances. Ask them for a written agreement that must include complete details about the program. Pay special attention to the clause that describes the method the company uses to charge their fees. The contract of debt management programs must also include the list of your debts they are managing the list of your creditors they will be communicating with on your behalf.

Make Sure Your Creditors Agree To Such Arrangement

It is important to note that many creditors may not agree to work with a debt management company. Therefore, before you sign up with a program, you must first contact your creditors to find out if they have any problem in working with a DMP. Always remember, lenders do not have any legal obligation to accept any DMP that is proposed to them. In some cases, they may agree to the program if you agree to make the some changes as suggested by them. They may simply refuse or make a completely different counter offer. So, get in writing that they agree to a specific program before you start making the payments as per the new plan.

Have A Realistic Budget

Most people fail even though they succeed in choosing the right debt management programs just because they work on an unrealistic budget. Therefore, it is very important for you to work closely with your counselor in order to make sure that your financial goals are attainable and that your budgeting plans are realistic. Do not predict tax refunds or windfalls; just work on your regular monthly income that is available with you.

Verify The Changes

As per the program, many new changes are likely to be introduced, such as reduction or elimination of over-the-credit-limit charges and late fees. Do a thorough verification that the rates and other terms have been adjusted according to the new plan. Every time you receive a monthly statement, review it thoroughly to make sure everything is working fine according to the DMP.

Monitor The Progress

It is true that companies that provide debt management programs work as mediator between you and the creditors. But, it is not wise at all to just sit back without caring to monitor whether the payments are being made to your creditors in a timely manner or not. It is very important for you to keep in mind that even though you are working with a debt management company, you still have your personal obligations to your creditors intact. You need to make sure that your lenders are getting their payments in time. For this, you must maintain regular contact with your creditors.

Always remember, if everything else is working fine but you again start making defaults on your payments, your debt problems will only increase. Therefore, you must exhibit some great financial discipline and commit to on-time payments to the debt management programs.

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Posted in Debt Consolidation, Debt Management | 1 Comment »

One Response to “How To Succeed With Debt Management Programs?”

  1. Joseph says:

    Any individual who finds him/ herself managing the debt can go for the debt management program. But, it is not enough to choose the good program. You have to make it successful with your financial discipline. The collection of debt management program should be done with some caution. You have to study some different program and then choose the best one for you. The past of company should also be checked. Better Business Bureau can provide you the details of the company. Once you decide for a company, all the deals should be in manner of written agreement. This company is going to represent you with your creditor, so all your debts should be mentioned in a list. You have to convince your creditors to accept a debt management program. If they are not satisfied with it, you can go for few changes and then take in a writing consent of their acceptance. Debt Management program can be successful only if you are consistent with your financial discipline. Without a strict budget, no body can get success in managing his/ her debt. You have given the charge to company of managing your debts, it does not mean that your work is finished.

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