How to Achieve a Successful Debt Management Plan

1. How to Achieve a Successful Debt Management Plan

2. A debt management plan or DMP can provide a great way to achieve a debt free life. However, you need to realize that to get that success, you need a well constructed plan to follow diligently.

3. Ideally, you should hire a professional credit counselor to help you. Most of them are from non-profit agencies that the federal government encouraged as the debts continued to burden citizens. Some of them may ask for donations but nothing will be imposed on you. Creating a debt management plan can be tricky and while it can be done by yourself, you need the advice of a professional to help make sure you can reach your goals despite your limited financial resources. The bottom line is, you need the correct DMP to make sure your debt relief efforts will be a success.

4. First of all, you need to know your finances so you can set a realistic budget. The credit counselor can educate you on how to do this. It is a simple subtraction of your expenses from your income. The result will be the amount that you can afford to pay for your debts. The key to make your debt relief efforts finish faster is by exhausting all savings possible from your expenses and putting that in the debt payment fund.

5. When you have that amount, you need to analyze if a DMP is the right debt relief option for you. A DMP requires having a fund that is more than the combined minimum payment of your debts. If you have less than this amount, you need to opt for another form of debt relief that will allow you lower monthly payments. While a credit counselor can help negotiate for a lower interest rate and complete waiving of your late penalty fees (if any), it will only be a minimal reduction of your monthly payments. If you need further reduction, opt for a debt settlement program instead. Most people who entered into a debt management program cannot really afford it so they end up failing at it.

6. Make sure the financial data that you will provide is truthful and accurate. The repercussions of that is a wrong assessment of your payment capabilities and thus a wrong debt management plan. While you may want to filter the debts that you will enrol in a DMP, it usually advised that you put all your unsecured debts in it. That is the only way you can plan to decrease all of them at the same time. Not only that, it can keep you from acquiring more debts on your other credit cards.

7. Another concern is the payment date that you will set. Make sure it is the right date when the bulk of your income comes in. That will help keep you from being late on your payments. Your creditors will all be expecting to receive payment from you every month - that is within 30 days. Be sure you can keep up with that. As you begin your payments, the credit counselor should send you a report on where your money goes to. Review all your monthly statements to check every detail. If there are reported payments that did not come in, investigate so you are assured that all payments are received and accounted for. The credit counselor can assist you in monitoring this but you need to do your own tracking too. Besides, it is a great motivation to see how you are progressing in your debt payments.

8. Sources: http://www.linkedin.com/company/fix-the-debt-campaign Article: http://ezinearticles.com/?How-to-Achieve-a-Successful-Debt-Management-Plan&id=7384816