Debt management plan - How does it work?
A debt management plan (DMP) is a process wherein your creditors agree to lower the interest rates on your unsecured loans upon the request of the debt counselors. The plan helps you pay less on your monthly payment amount and get financial freedom within 3-5 years.
A debt management program or plan helps you manage your finances through good money management tips and budgeting. This plan is usually offered by the credit counseling agencies and debt management companies.
Find out how this plan works and helps you save on the interest rate.
DMP - How does it help you get a total money makeover?
You can get a complete money makeover through debt management help. Once you enroll into the program, the company will take the first step to change your financial life. They will analyze your income, expenses, money mistakes, interest rate, status of your accounts, monthly payment amount, total outstanding balance, etc. during the debt management counseling session. The counselors will develop a budget which will suit your current financial condition. They'll ask you to follow this budget everyday so as to reduce your expenses and increase savings.
The counselors will help you in managing debt and getting a financial makeover. They'll contact your creditors and request for a reduced payment plan with lower interest rates. This helps you manage debt quite easily. All you need to do is make a single monthly payment to the company. The counselors will distribute your payment to all the creditors. They'll do so till you the total outstanding balance is paid in full.
Check out how DMP helps you start a new financial life and manage money efficiently.
Have a look at the benefits of getting a financial makeover through debt management services.
- You'll get less calls from creditors regarding payment related issues.
- You'll have a budget-friendly monthly payment plan
- You can start thinking about your financial goals
- You can start working on rebuilding your credit
- You can lead a life without any stress
- You can save money for the golden years of your life
Last but not the least, there's yet another benefit of using DMP. You can avoid getting sued for your unpaid bills. If the creditors are satisfied with the monthly payments, then they're less likely to register a case against you.
When is a debt management plan the best option for you?
A debt management plan will be suitable for you under the following conditions:
- You want to reduce interest rates and save money
- You have a regular source of income
- You can afford to make a single monthly payment
- You can change your lifestyle as per your budget
- You can pay the fees of the debt management company
There is yet another way to find out if debt management is the best option for you. What you can do is, make a comparative analysis of various options that will help you resolve your financial problems. You can check out our comparison chart for this purpose.
DMP - What are the 4 dos and don'ts?
- Send payments to the debt counselors in every month
- Stick to the budget plan that has been created for you
- Follow-up with the payment progress
- Check your credit report from time to time
- Notify the counselors about your change in your financial state
- Applying for new loans while you're in the plan
- Leading a lavish lifestyle and crossing your budget
- Making payments without knowing if the creditors have accepted the plan
- Signing an agreement without checking the credentials of the company
- Sending payments without reading the written agreement letter
Can you get free debt management advice?
Most companies don't give a free debt management advice to the people. If you're really want to lead a healthy financial life without spending a substantial amount on fees, then work with a non profit debt management company. You'll have to pay a meagre amount on the fees, which will help you save money. You'll get the same service at minimum cost.
Finally, there are several companies that offer online debt management services to the people. You can get services from these companies within a few clicks. However, make sure you read the online reviews of the companies before accepting any payment. This will help you avoid the scams that are quite rampant nowadays.