For people encountering a financial crisis, a debt management plan is a godsend. A debt management plan enables you to manage your financial resources so as to eliminate debt from your life. It guides you on how to channelize your money in such a way that you are able to meet your daily expenses while repaying your debts and also on how to get rid of the accumulated debt at the earliest. It allows you to gather all your debts into a single entity and create a repayment plan where you pay your debts through comfortable monthly payments.
When you create a debt management plan with the help of an outside agency, ensure that you choose a reliable and legitimate firm. If you are making payments through a debt management plan, ensure that you contact your creditors and confirm with them that they have accepted the proposed plan before you send any payments to the agency handling your plan. After the creditors have accepted the plan, it is important that you make regular, timely payments on the debt or it could cause more harm to your credit rating than the original debt balance. You could end up losing all the progress you’ve made on paying down your debt and any incidental benefits that were being offered as part of the plan including lower interest rates and fee waivers. Creditors who may have forgiven late payments that were made by you before you started the debt management plan may be unwilling or unable to do so if payments are late even after you have enrolled in the plan. You could also end up having to pay late fees for the defaulted time period. Always read your monthly statements promptly to make sure your creditors are getting paid as per your plan and make sure that you contact the organization responsible for your debt management plan if you will be unable to make a scheduled payment, or if you discover that creditors are not getting paid.