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Making a debt management plan work for you


Finding a Debt Management Company

If you've decided on a debt management plan to reduce your monthly payments on credit card payments, outstanding student loans and/or medical bills you will want to find a reputable firm to deal with. Be certain you read all the "fine print" in the contract you sign to verify there are no hidden fees or charges and of course make sure your monthly payment history is being reported to all major credit bureaus.

Doing your homework

You can find information about debt management companies on a variety of websites, and there are government websites (such as the FTC) that offer assistance as well. If you're having difficulty deciding which debt management company is best for you we strongly urge you to read Fiscal Fitness: Choosing a Credit Counselor before making your decision.

Protecting Yourself

There are many reputable debt management companies that you can interview when you are searching for a new plan that will work for you. Before you decide on one please be sure to:

  • avoid any company that charges high up front fees
  • avoid any company that will not send you information
  • avoid any company that asks you to begin making payments without reviewing your financial status
  • avoid any company that asks you to begin making payments before your creditors have accepted your plan
  • avoid a company that charges high monthly fees for their services

Getting Started

If you're in debt and you've decided on a debt management program there are some things that you must do to ensure that the plan works to your advantage. While some of these tips might sound like common sense, too often they are overlooked once you are in a debt management plan.

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On Time Payments

You must remember that the reason you decided on a debt management plan was because you were falling behind on your payments. In order to pay down your debt in a timely manner and begin building your credit reputation you must make sure that all payments are made on time.

NO additional debt

Too often because a debt management plan allows you to lump all of your high interest payments into one smaller monthly payment you will have extra money to spend. Unfortunately, this can also result in your receiving offers for additional credit cards. Don't fall into the trap of exchanging one set of credit cards for another. If you can't pay cash, don't purchase!

Verify payments are being made

While you're making payments on a debt management plan, you should carefully review all of your monthly statements. Often, some less than perfect debt management counselors are adding additional fees and charges on your monthly payments which may result in you paying down your outstanding debts slower than you originally intended.

While there are many companies that offer you debt management plans you want to make sure that you're payments are being made on time and that your debt is actually being paid down. Don't fall into a trap and make sure to do your research.

Related topics: debt self help, debt protection laws




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