If rising debt is a constant source of anguish for you and you do not know how to come out of the situation, then you must consider some debt solutions such as debt management. This solution helps you when you are in some sort of financial difficulty, reduce your debt by lowering your interest rate and thus leading to a lower outstanding balance.
Debt management is done by enrolling you in a debt management program also called a debt management plan. This plan may help you negotiate lower rates of interest and also get your late fees waived off. It is very important to choose a proper debt management program. A few steps that you can follow to choose a debt management plan are as follows.
1. Get a good credit counselor: The terms debt management and credit counseling have almost become synonymous. However, they are not the same. The stage before debt management that you should consider is credit counseling. You should opt for credit counseling before going for debt management. Choose a good credit counselor who can guide you when it comes to the formulation and the following of a budget. Only after you are still in debt after following the budget will you be enrolled into a debt management plan. Usually credit counseling agencies are the ones that provide with the debt management plan.
2. Search for a licensed company: Make sure you verify if the agency is licensed or not. You must also check that the agency has current accreditation and that the do have a non-profit status. These factors however, are no guarantee that the agency is legitimate.
3. You must know how the program works: Your program may be called anything such as debt consolidation or debt negotiation or debt management. Find out exactly what your plan is and what it means. You must know that these are different options and before you opt for any you must be completely aware what you are getting into.
4. Do not pay a large amount as upfront fees: A small initial fees is normal but if an agency charges a huge amount of upfront fee, then you should not choose that agency. If you are asked for any donation or fee then make sure that you find out what it is really for. Do not let the agencies trick you into paying one fee after the other.
5. Find how the payments will be distributed among creditors: You are the one responsible for making the payments to the creditors. It is not your counseling agency. Some agencies are known for delayed payments to creditors for which you may fall into trouble. So you must make sure that your debt management company or credit counseling agency will send your payments to creditors on time and also within the correct billing cycle.
Hope you enjoyed this guest post from Dorothy.