Understanding a Debt Management Plan
A debt management plan or DMT as it is commonly known is a system that is tailored made for your needs to help you come out of debt. This is very comprehensive system that combines in-depth analysis of your debt, capacity of repayment and finance management. However, before getting into this, a lot of time and effort would be required for a reputed credit counseling agency to recommend this measure.
What Does a Debt Management Plan Involve?
First of all this is a counseling service where you look back and understand what went wrong with your finances. It is very important that you identify and internalize the reason for which you are today indebted to such an extent that you need outside help and counseling. Once this objective is achieved, you would need to work out a feasible plan whereby you could put aside some money on a monthly basis to repay the debts. This is a stringent plan which would demand very strict financial discipline from you.
The plus point with a debt management plan is that it would force you to stay on the road to freedom from debt by continuous counseling, budgeting and a contract that you would have to sign. Another positive aspect of a debt management plan is that it would be able to negotiate on your behalf for lower interest rates and maybe other benefits such waiving of late fees, etc. which would reduce your financial burden.
What You Need to Know Before You Sign the Debt Management Plan
Before you enter into an agreement you need to find out all the details regarding the conditions imposed by such a contract. First of all, you would be required to pay a fixed sum of money to the DMP organization so they would ay off your debts. Check carefully whether than sum is feasible for you to pay. It is very important that you do no default payments once you enter such a contract.
You would also need to find out what are the debts that the debt management plan would cover. If there are any accounts that would not come under their purview, you would have to make those bill payments yourself.
Most DMP organizations give you an online update about your account on a monthly basis so you would know where you are financially. Enquire and know how and at what interval the organization would give you status reports.
Most important of all, you need to know what services you are entitled to under the DMP so you could make the best of them, i.e. drawing up budgets, offering financial investment advice, etc.
