Debt management: Repay debt without hurting your credit

Watch Video: How debt management helps you manage bills in 11 steps
  • 01 Calculate your total debt
  • 02 Try for a repayment plan
  • 03 Try debt management
  • 04 Go for free counseling
  • 05 Get enrolled
  • 06 Get lower rates
  • 07 Obtain an affordable plan
  • 08 Get your plan approved
  • 09 Make one monthly payment
  • 10 Track your payments
  • 11 Get out of debt

A debt management plan or program (DMP) is a process through which you can repay your debts at a lower interest rate. With the help of this plan, you can become debt free within 3-5 years.

Can you get online debt management help?

Yes. Online debt management help is available. However, make sure you read online reviews and check the credentials before you approach a debt management company.

How much you can save

Amount you can pay monthly on your debts.

When and Why of Debt management plan

When you should go for a DMP

  • You earn a decent amount every month
  • You can pay a certain amount every month
  • You want to repay your outstanding dues in full
  • You can change your lifestyle to follow your budget
  • You are facing problems in managing your multiple bills
  • You can pay professional fees to the debt management company

Why you can take help of a DMP

  • You can have positive impact on your credit report
  • You can have a stress free life to enjoy
  • Youll get an affordable monthly payment plan
  • You can start working on rebuilding your credit
  • You can save money when you become debt free
  • You'll get fewer calls from creditors regarding payment

DMP - How does it help you get a total money makeover?

You can get a complete money makeover through debt management help. Heres how a debt management company can help you:

Contact your creditors & request for interest rate reduction

The debt management company will contact your creditors and ask for reduction in interest rate. Itll become easier for you to repay debts.

Disburse the amount amongst your creditors

Once you make the payment to the company, it will distribute the amount amongst your creditors as per the agreement.

Offer tips to manage personal finance

The counseling agency or debt management company will offer a free counseling session. Through it, the counselor will offer suitable tips to manage financial situation and repay debts.

Offer a debt management program

The company will offer a DMP if you cannot manage money all by yourself.
  • Plan a suitable budget to follow: The counselor will offer you a suitable budget following which you can save money.
  • Decide upon a monthly payment: The counselor will also decide upon an affordable amount, which you need to pay to the company, every month.

Steps to choose a debt management program

1

Try to manage your multiple bills yourself

Plan a budget and cut down unnecessary expenses in order to use the money to repay your debts.
2

Search for a reliable credit counseling agency

If you can't manage your accounts on your own, you can take help of a credit counseling agency. Search for a licensed credit counseling agency in your state.
3

Take help of a credit counselor

Follow the budgeting tips offered by the counselor to save money and repay debts.
4

The agency can offer a DMP

If you can't manage your finances on your own even after following the budgeting tips, the counseling agency can offer you a debt management program.
5

Know the time period to repay debts in full

Before you enroll, ask how many months it'll take to repay the outstanding balance in the multiple bills.
6

Ask how much you need to pay monthly

Make sure you can comfortably make the agreed upon monthly payment to the debt management company.
7

Find out how payments will be disbursed to creditors

Ask on which date, payments will be disbursed to the creditors, so that you can track payments. You should get monthly statements with payment details.
8

Know about the fees you need to pay

Ask how much you need to pay as professional fees for the debt management plan.
9

Know how personal information will be protected

You should take help from a reliable organization so that your personal and financial information remain secure.
10

Get everything written in details

Before you enroll in the plan, make sure you get everything written down and go through it carefully.
11

Sign up if you think it’ll serve your purpose

You should enroll in the plan only if it suits you. You should be able to make the required monthly payment.

Dos and donts of debt management

Dos

  • Check your credit reports at regular intervals
  • Make the payments to the company every month
  • Follow the budget planned by the debt counselor
  • Notify your counselor if there’s a change in your financial state

Donts

  • Use credit cards till you repay the debts completely
  • Spend more since interest rates on bills are reduced
  • Enroll with a company without checking its credentials
  • Start making payments before you get a written agreement