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Credit Counseling & Debt Management Plans

Many individuals who are plagued by credit card, medical debt, or student loans and cannot obtain a consolidation loan (click here if you are unsure what that is) rely on Credit Counseling and Debt Management Plans (DMP). However, just because you are in credit counseling does not mean you need to be in a debt management plan.  Please read on to see what both entail.

Credit Counseling

If you cannot create a budget for yourself and follow it (no self-discipline) and you are unable to work out payment plans with your credit card provider or medical provider then contact a credit counseling company. To get started, fill out the form at the form by clicking here. The form is free, confidential, and there is no obligation on your part. Be weary though because many credit counseling organizations are "non-profit" but that does not mean their services are free and affordable. Ask many questions first about how the process works and what fees are involved. More importantly, make sure you document who you talk to you with the appropriate dates.
Credit counseling companies help you manage your money by creating a budget for you along with a plan to rid you of debt. These companies are trained and certified to help you attack your debt and get your finances under control. If you can deal with a local credit counseling company it is better then dealing with someone strictly over the phone.

Debt Management Plans

If the major reason for you debt is the inability to pay back your debts (you engage in wasteful spending and cannot stick to a budget etc), a credit counseling agency may recommend that you enroll in a debt management plan (DMP). DMPs are recommended by your credit counselor if it fits your situation. It is recommended that you sign up for a DMP if a certified credit counselor has recommended it for you as part of your overall counseling services. These DMPs work by you depositing money each month with the credit counseling organization and then they pay off your unsecured debts (credit cards, student loans, medical bills) in accordance with the agreement/plan your counselor has negotiated with your creditors (credit card company, bank, medical provider etc). Sometimes your creditors may waive late fees and lower interest if you consistently make timely payments.  The DMP can take from 48 months to 5 years to complete depending on the severity of your situation.

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