If you are having debt troubles, one potential solution to your problems could be a debt management plan.  These plans are a method of consolidating your credit cards and debts, and are specifically designed to help people who are in over their head in debt and would like a faster, easier way to get out.  How could a debt management plan (or DMP) help you?

Benefits of a Debt Management Plan

A DMP potentially offers the following benefits:

  • Lower interest rates
  • Waived Late Fees
  • Waived Over Limit Fees
  • Accounts are re-aged and reported as current on your credit report
  • One low monthly payment
  • Helps rebuild and improve your credit
  • A FASTER way out of debt

You Could Benefit

Not everyone will benefit from a debt management plan because it is an option designed for people who need a little bit of help to get out of debt.  If you can easily pay off the balances on your credit cards, you probably have no need for a DMP.

However, many people allow their debt to slowly spiral out of control without even realizing it.  If you are experiencing any of the following warning signs, you could likely benefit from a DMP and you should at the very least speak to an accredited, non profit credit counselor about your situation:

  • You have very high interest rates.  High interest rates can often be a signal that lenders consider you a “risky” borrower.  More importantly, high interest rates can cost you lots of money!
  • You can only make minimum payments.  If you only pay the minimums on your credit cards, it might take you 20 to 50 years or more to pay them off, even if you no longer use them!  If you can not make higher than the minimum payments, you could already be in some financial trouble and should get help immediately.
  • You are behind on your payments.  This one is easy to figure out.  If you fall behind, you could probably use some help.  Plus, failure to pay on time can cause some lenders to raise your interest rates and hit you with hefty late fees.
  • You are over your limits or close to your limits.  If you are using more than 80 percent of your credit on an account, you may be considered maxed out, causing your credit score to drop.  This also usually indicates that you are too reliant on your credit cards, and you may need a wake up call.
  • You have high debt loads, and you can’t seem to make them budge.  Many people make their payments on time every month, but their debt seems to be stuck or even continues to move up.  If you find yourself in this situation, speak to a credit counselor who can help you come up with a plan to tackle your debt efficiently.

If you find that any of the warning signs apply to you, there is a good chance you could benefit greatly from a debt management plan.  However, a dmp is not for everyone, and you should only get one after a credit counseling session with a trusted, qualified counselor.  

Remember, a truly reputable credit counselor will not give you a hard sell or try to pressure you into any particular course of action, but will instead be there to answer all of your questions about debt, your options.  Only after a thorough examination of your situation should a credit counselor recommend or advise you on a particular debt option, and in no case should he or she pressure you into any product or service option, including but not limited to a debt management plan.