Compare These Top Vendors for Debt Management Plan

A Guide to Debt Management Plans

A debt management plan (or DMP) is a systematic way to reduce and eventually eliminate outstanding debt and improve your credit rating.  While it’s possible for you to design your own repayment schedule, a DMP is organized through a credit counseling agency to help organize the process and make clear to your creditors that you’re taking the problem seriously.  The agency will design a plan to fit your needs and forward the appropriate debt payments, assuring them of their secure handling.  Let’s think about why you might need a DMP, and what to watch out for if you start looking for one.

Benefits

DMP’s are professionally managed, and the team you have access to is likely to have seen financial problems like yours many times before.  They should be able to design a plan that suits your needs, and that does eventually free you from the most crippling assets of your debt.  Usually, DMP’s operate on a schedule of around 36 months, so you’ll be working with these people for a while – and they should be there to answer your questions and offer support all the way through.

In cases of extreme debt crisis, an ordinary repayment program may not be convincing enough to your creditors.  You may have to convince them that you’re serious about re-establishing your credit, and this can only be accomplished if you hand sign away some of your independence.  That’s what DMP’s accomplish for you: since you sign on with a credit counseling agency and agree to forfeit some control, you’re signaling that you’re willing to forfeit some of your worse tendencies.

Remember: if you’re in a financial hole, you’ve lost some of the trust of your lenders.  It can be earned back, and probably should be – if you have any interest in buying a house or investing in a business, or any number of other ventures, including good medical coverage.  If you’ve proven yourself unreliable in your past debt repayment schedule, forfeiting some control to a third party may be just the thing to put yourself on the road to security.

Pitfalls

Selecting a good credit counseling firm that will offer you a sound and effective DMP can be tricky.  Professionally speaking, you’re in a weak spot, and many companies will try to take advantage of you.  That’s why you have to keep your eyes open, and do careful research before choosing an agency and a plan that’s right for you.

Watch out for large up-front fees.  No reputable agency will try to squeeze their commission out of you up front without delivering on the services, and a good one should charge you a relatively low premium.  Some are non-profit, and these are ideal, but be certain at least that it’s an accredited agency.

Read the customer reviews of the companies you’re zeroing in on to get a sense of what you can expect.  You’re not the first to go through what you’re going through, and having the reassurance of others you trust can be the most important aspect of your decision.

Conclusion

A good DMP can make all the difference in the future of your financial life at this critical stage.  Choose wisely, and stick to the plan.