Getting out of Debt - Debt Management Plans

Thousands of people each year are seeking out the help of debt management/credit counseling organizations, where they not only receive help with managing their bills, but they also are setup on a debt management plan, devised for getting out of debt, and staying there. Basically, you are asked by your counselor to provide information regarding your income, your living expenses, and your debts, and then together, you work out a budget you can live with, that will still allow you to pay all of your debts, and eventually be debt-free. These advisors then take this plan to your creditors, and negotiate with them to lower your monthly payments, lower your interest rates, and stop any extra fees from accruing, so that you can payoff your debts, and still have money to live on each month. The organizations that offer these services usually charge a monthly fee for doing so, as they also allow you to send them one payment, and then disburse it out to all of your creditors, but there are many non-profit organizations that also offer these services. In most cases, these plans are designed to get you out of debt within five years, provided you are able to stick with them.

For people who have amassed significant debt, or who are just bad at remembering due dates, and therefore get hit with lots of late fees and increased interest rates, these debt management plans can really be a godsend. The only other options for many of these people are not desirable, bankruptcy, or charge-off. Remember, the main priority of any lender is to have you, the debtor, pay back what you borrowed from them, and in many cases, if they can at least get that, they are happy. When you have a debt management plan in effect, these creditors realize that you may be financially struggling to pay your debts, and in most cases, are willing to significantly cut their interest rates, and drop minimum payments, just to ensure that your debt doesn�t end up in their bad debt file as uncollectible. They would much rather try to negotiate with you, than have to eat your debt. Most, not all are more than willing to work with your debt management advisor to find a suitable solution for all parties involved, but again, you have to hold up your end of the bargain.

In some cases, it can take some time to get your debt management plan setup, because the lenders may be unwilling to accept the first proposals that are submitted, and then you and your advisor have to make changes to your plan, but once all of the paperwork is done, and you are making your payments, the collection calls will usually stop. There may be the occasional call if your payment from the debt management company isn�t disbursed on time, and in that case, talk with your debt management counselor about having your due date changed, to avoid future issues with the lender.

With the economy in such sad shape right now, lenders realize that if they have a customer who is willing to pay, but just needs some help, they are often happy to work with them, rather than see the account charge-off and be sold to a collection agency, for often, pennies on the dollar. This is in your favor, because you will be getting out of debt sooner, with less interest applied, and can rebuild your credit, put some money in savings, and stay out of debt in the future!

It is always a good idea to be honest with your creditors, and to try to work with them if you can, but in many cases, lenders won�t work with you, or believe that you financial situation really is as bad as you claim, until you have a debt management counselor on your side. It is sad to say, but in many cases they are more willing to work with the counselor than they are with you, possibly because when you seek out that kind of help, they realize that you really are in a financial bind, and aren�t just making the same old excuse they are tired of hearing from everyone who is past due on their account.

So, if for whatever reason you find yourself in a pickle financially, talk with your creditors, and if they aren�t willing to work with you, seek out the help of a reputable debt management agency, where you can start your own getting out of debt plan!