How to set up a Debt Management Plan

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How to set up a Debt Management Plan
2 years ago
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Setting up a debt management plan could be the difference between financial ruin and financial security. This is especially true for consumers who have fallen into large credit card debts, multiple loans, or unemployment. Knowing what to do and how to do it when financial ruin is looming on the horizon isn?t something that people are born knowing how to do. It is something that they either have to research or hire someone else to take care of for them.

Hiring a debt management counseling service is the easiest strategy to use. The agency does all of the work for the consumer who only has to make a single monthly payment to the agency until the debt has been paid in full. The debt management agency makes the individual payments to the consumer?s existing debts including home loans, credit card bills, car loans, student loans, installment loans, dental bills, medical bills, and more.

To get started, the consumer must provide a full history of his current bills along with his financial status including existing savings, CDs, and bonds. The debt management agency will use of this information to calculate a payment plan for the consumer. The largest balance due is generally given priority and will include the largest monthly allotment.

The debt management agency provides the consumer with a monthly payment figure along with a due date for each month. In order to calculate this figure, the agency will determine the consumer?s disposable income after his living expenses and secured loans such as mortgages have been paid.

Additionally, the service attempts to negotiate on behalf of the consumer with his credit card companies and other lenders. The primary purpose of this is to secure lower interest costs or waived late fees in order to make the consumer?s debt more manageable.

In general, a counselor is assigned to each consumer and the debt management plan is reviewed on a regular basis to assess its viability and level of success. Typically, the consumer will pay a fee to the agency and has the right to cancel the arrangement at any time unless stated otherwise in his agreement with the service.
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