Debt Management Plans: Choose the One that is Right for You

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Debt Management Plans: Find the Right One for You
Find out about different options for debt management plan's offerings and prices to find the right fit.
By Sean Pyles Senior Writer | Personal finance and credit, and personal finance Sean Pyles leads podcasting at NerdWallet as the producer and host of NerdWallet's "Smart Money" podcast. The show "Smart Money," Sean talks with Nerds from the NerdWallet Content team to answer listeners' questions about personal finance. With a focus on thoughtful and practical advice on money, Sean provides real-world guidance to help people improve the financial situation of their lives. Beyond answering listeners' money questions on "Smart Money" Sean also interviews guests who are not part of NerdWallet and produces special segments to explore topics like the racial wealth gap, how to start investing and the background of student loans.
Before Sean took over podcasting at NerdWallet, he covered topics that dealt with consumer debt. His writing has been featured throughout the media including USA Today, The New York Times and elsewhere. When Sean isn't writing about personal finances, Sean can be found digging around the garden, taking walks, or taking his dog on long walks. Sean is located at Ocean Shores, Washington.





Aug 18 2021


Editor: Kathy Hinson Lead Assigning Editor Personal financial, credit scoring, financial management and debt Kathy Hinson leads the core personal finance team at NerdWallet. Previously, she spent 18 years working at The Oregonian in Portland in positions such as copy desk chief and team director of design and editing. Prior experience includes news and copy editing at various Southern California newspapers, including the Los Angeles Times. She earned a bachelor's degree in journalism and mass communications from Iowa's University of Iowa.







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Are you overwhelmed by your debt? A debt management plan might be the solution.
This tool for debt repayment puts you on a path to settle your debts -- typically from credit cards over 3 to 5 years. With the help of a DMP it is possible to have multiple debts rolled into one monthly payment and the creditors decrease your interest rate. In the exchange, you are obligated to the payment plan which typically lasts between three and five years. Note that interest rate cuts are standard for credit counselors across the country, based on your creditors' guidelines and your budget.
Here's a review of plans for managing debt at some large nonprofit .
Agency / availability



Average fees



Available in 50 states


The cost of the initial fee is $31.
$20 monthly fee



All states are covered, with the exception of Minnesota


Start-up fee of $42
A monthly payment of $30



The 50 States are represented as well as Puerto Rico


Start-up fee of $24
Monthly fee of $28



Available in 50 states


$35 startup fee
Monthly fee of $29



It is available in all 50 US states.


$35 for the initial fee
$ 24 per month for a monthly fee









Plans for managing debt: Pros and pros and
Pros:
You can cut the interest rate by more than half.
Helps pay off debt faster than doing it yourself.
Consolidates debts from several creditors into one installment.

Cons:
It is mostly used to pay off credit card debt. It can't be used for student loans as well as medical debts or tax obligations.
The plan lasts between three and five years and you're typically unable to get credit cards or obtain new lines of credit during the time you're in the plan.
A missed payment could sabotage the plan and stop your interest rate cuts.

It's the time to pay off debt
Register to join the link and track everything from cards to mortgages in one place.






Do you think a debt management program is the right choice for you?
DMPs may not be suitable for all. According to the agency, only 10 20 to 20% of customers are able to avail this option for debt relief. Of those who choose to, approximately 50% - 70% of them complete the plan, depending on the year and the way the agency reports accomplishments.
It is possible to think about a DMP in the following situations:
The amount of debt you are unable to pay off, such as from credit cards, ranges from 15% and 39 percent of your earnings.
You earn a steady salary and believe you could pay off your debt within five years if you were to pay an interest rate that was lower.
You can get by without opening any new credit lines while you're in the plan.

Alternatives to a debt-management plan
DMPs may not be the best option for you . Troublesome debts from student loans and medical bills will generally not be covered by such plans. Other options:
If your problem debt is not more than 15 percent of your income, you could take an DIY method using the method.
If you have adequate credit to be eligible and you are able to combine your the debts of several creditors into one with a lower interest rate. You have control over how long the loan is and retain your right to apply for fresh credit lines.
It may be a better option if your debt is greater than 40% of your annual income and you see no means of paying it off within five years. This debt relief tool could rapidly give you a new start. Consumers have credit scores that begin to rebound in as little as six months.

What are the things you'll need to do to know
If you think you think a DMP might be your best solution for debt relief begin by . Consider:
Accreditation and certification: Search for an agency that's a member of the or the . They require that agencies be certified by an independent group, and both require certification and a standard level of professionalism for counselors.
Access: Ask yourself which method you'd prefer to use to get services: over the telephone, in person or online.
Cost: Fees vary by agency as well as the state you live in and your financial need. Before signing up, you should know the amount you'll pay each month toward your debt and fees.



Author bios: Sean Pyles is the executive producer and host of NerdWallet's Smart Money podcast. His writing has been featured in The New York Times, USA Today and elsewhere.







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