Getting out of debt means more than simply paying down what you owe. It also means learning how to take control of your financial life and creating a plan for avoiding debt in the future. Enrolling in a debt management plan might be part of the solution for you. Take a look at our debt management plan advice to see if it’s the right thing for you and to find out what you can do next.
Have Credit Counseling First
Before you sign up for a debt management plan, it’s a good idea to meet with a credit counselor, and many debt management programs are actually connected to credit counseling agencies. The Federal Trade Commission also strongly advises only signing up for a debt management plan after you’ve worked with a credit counselor. Your counselor will take a look at your financial picture, including the amount of debt you have, and provide you with realistic advice to help you reach your goals. Credit counseling looks beyond your debt: A counselor can help you make a budget and plan for reaching certain financial goals, too.
Check Out the Company
Along with seeing a counselor first, one of the more important pieces of debt management plan advice you’ll get is to research the company or agency before you agree to work with them. While many credit counseling and debt management companies have your best interests at heart and want to help you, some are out there just to make money. Find out if the agency is nonprofit or not, if the people who work with it are certified by agencies such as the Association of Independent Consumer Credit Counseling Agencies (AICCCA), and if the company has a good rating with the Better Business Bureau or a similar consumer protection agency.
Get an Estimate and Learn About the Plan
Once you’ve confirmed that the company is working in your best interests and has the certifications to prove that, it’s time to find out more about your specific debt management plan. The counselor you’re working with should let you know what your monthly payment will be on the plan, how long you can expect to be on it, and what the credit card companies and other lenders agreed to. For example, some credit card companies will give you a break on interest rates or fees if you are in a debt management program. In many cases, signing up for debt management means you’re limited when it comes to getting new credit. You may not be able to apply for a new credit card or use your existing credit cards when you are in the middle of the plan.
Budgeting Basics
One benefit of being on a debt management plan is that you have a clear idea of the amount you need to pay each month towards your debt. You can use that information to build a budget for the time you’re on the plan and to set financial goals when the plan is over. Your credit counselor can guide you through the budgeting process, helping you see how what you’re spending compares to your earnings and helping you make plans for saving and other goals.
Since 1998, CESI has helped more than 300,000 people through its credit counseling and debt management plans. We work closely with each person, getting in touch on a monthly basis during the first year, to help them stay on track. If you’re ready to kiss debt goodbye, we’re reading to help you.
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