Digital News Report – Sometimes Credit Counselors may recommend a Debt Management Plan as a way for you to pay off you debt. A Debt Management Plan can be one way to lower your credit card interest rates and reduce fees imposed by creditors. When getting a debt management plan, you should make sure that the credit counseling service that you are using is a government approved one, and that they check out OK with the Better Business Bureau. While a Debt Management Plan can make paying off your credit card debts easier, you still are responsible to double check to make sure that your credit card bills are being paid on time each and every month.
A good credit counselor will be looking at your whole financial picture, and be ready to educate, create a budget, and assist the person facing the debt. They shouldn’t push you directly into a debt management plan without understanding your finances first. A debt management plan may be set up where you deposit money each month with the credit counseling organization, they then pay your outstanding credit card balances, student loans, and medical bills. Sometimes creditors will agree to a lower interest rate and forfeit certain fees if you are making payments through a debt management plan.
The FTC recommends that you contact all of your creditors to make sure that they have accepted the proposed debt management plan before you make any payments to the credit counseling company that has set up the repayment plan. Also check your bills to make sure that the payments have been received from the debt management plan. Of course you will also want to make sure that you pay your debt management plan on time every month. If for some reason the credit card is not being paid contact the debt management plan company to fix the problem. Also let the company know if you can’t make the payment on time.
Failure to make you debt management plan payments on time can cause interest rate increases as well as a reinstatement of fee charges. Once you have failed on a debt management plan it becomes more difficult to negotiate with the creditors.
It is possible for Credit Counseling Companies to go out of business, which is another reason to check your monthly bills to make sure they are being paid. If they are going out of business stop making payments to the debt management plan, then start making payments directly to your outstanding creditors. Tell your credit card companies that the Debt Management Plan company is going out of business and see if they will continue to give your the reduced interest rates that was with the debt management plan.
Make sure that the credit counseling service has a range of services that they provide. They should also be licensed to operate in your state, as many states require this. If they are not approved for business in your state, do not hire them. They should offer you free information about what they offer for their services. You should make sure to get written documentation and agreements especially when participating in a debt management plan. See if the company is accredited. Check out the credit counseling service with the state Attorney General or the Better Business Bureau to see if there are any complaints. Learn about what their fees are and if there are any set-up or monthly fees, with a written price quote of these fees. If you can’t afford the fees ask them if they can waive the fees or reduce them.
By: Victoria Brown