Debt management plan or DMP helps you make debt step out of your life. This debt relief plan has been designed for the consumers who need help in managing their overwhelming debts. However, you need to be little cautious before enrolling into the debt management plan. This is because the proficiency and performance of the debt management companies differ spectacularly. Read along to know about 5 tips which you should follow before setting up an appointment with a debt counselor.
Tips to follow before enrolling into DMP
Check out the 5 tips which you need to follow before signing up for a debt management plan.
1. Collect all your receipts and statements: The debt counselors will access your financial situation in the initial phase to determine the weight of your debt load. Open your file cabinets and collect all the financial statements. Think rationally why you got into the financial mess. The debt counselor will ask you various types of questions in the meeting. So, it is better to be prepared before fixing an appointment with the counselor. Be ready to have a frank discussion about your long term and short term financial goals too.
2. Sign up with an affiliated company: It is important to differentiate between a fraudulent debt management company and a genuine one. A fraudulent company will run away with your money instead of disbursing it to the creditors/collection agencies. The rule of thumb is to work with a debt management company which is affiliated to Association of Independent Consumer Credit Counseling Agencies or National Foundation of Credit Counselors.
3. Work with a knowledgeable counselor: Just a great BBB rating is not enough. When you're enrolling into a debt management plan, make sure you're working with the best debt counselors in the country. You're paying money. So, you deserve to work with the qualified, experienced, practical, witty and impartial debt counselor. Check the credentials of the debt counselor, and then decide about enrolling into the company.
4. Be an active participant: Don't forget about your accounts after enrolling into the debt management plan. You need to actively work with the debt management company. Check the statement sent by the credit card companies. For instance, the debt counselor has told you that he has lowered the interest rate on a credit card by 5%. The credit card statements will help you determine if the debt counselor has spoken the truth.
5. Have practical expectations: It will take around 3-4 years to become debt free through a debt management plan. If you're short of cash, then this debt relief plan can't help you eliminate debt quickly. Your counselor will recommend this plan only when you have some surplus cash at the end of each month. If you don't have enough money after meeting the monthly expenses, then this debt relief plan is not for you.
Make a pledge to not incur more debts after enrolling into a debt management plan. Don't borrow money when you're trying to pay off your debts. Stay away from a new loan or credit card. Have a better control over your finances. Most of the debt management companies offer financial counseling to the consumers. Take advantage of the financial education to lead a debt free life.