In general, when our income falls short of covering our expenses, we begin to borrow. Things can get dicey when borrowing becomes a habit and later on, a necessity. Soon enough, we run up huge debts and every paycheck received seems inconsequential to the debts owed to our creditors.
If rising debt woes are taking a huge toll, you must look for a way to clear your financial mess. Debt management programs (DMPs) can be a solution to your worries. However, good debt management advice can help you to regain control over your finances, but poor advice can degrade your finances further.
Keep in mind that a number of DMPs have gone out of business due to poor management or fraudulent practices. Therefore you should take extra care when choosing a debt management company. Read on to learn how to make your debt management program a success.
- Pick a well-established, reputable and reliable debt management program (DMP) and check with the Better Business Bureau or the State Attorney General’s Office of Consumer Affairs whether any prior complaints or reports have been lodged against the respective debt management company.
- Work closely with a financial counselor who can streamline a repayment plan and a realistic budget based on your current income and expenses. Strictly follow the budget and learn to live within limited means.
- Get all information, plans, commitments and guarantees offered by the debt management company in writing. Refuse to accept any verbal assurances as they are non-binding.
- Negotiate tactfully with each of your creditors and convince them to lower the interest rate, reduce the debt amount or extend the repayment duration. Creditors might be reluctant initially to give consent to your DMP plan and make a counter-offer. Don’t lose hope, keep trying until you succeed.
- Once your creditors approve the DMP, make sure that your payments are posted on a regular basis and the account remains current. Keep in touch with your creditors to check whether the monthly disbursements are made properly.
- Scan through all the monthly statements intently and verify the information provided by the creditor and the Financial Counselor separately. If possible, crosscheck the adjusted interest rates with the creditors and make sure you do not incur further late fees or over-the-credit-limit charges.
Follow the above mentioned points to achieve a debt-free life sooner.