Proceeding with Debt Consolidation

You should cut up your credit cards and stop using other credit facilities. You need to keep track of your income and expenses and make sure that you are not spending more than you earn. This is a real step towards getting rid of your debts and gaining long-term stability. Debt consolidation will not help you in the long run if you continue to accumulate debt by relying on credit cards. If you are organised and disciplined in the way you manage your money, debt consolidation may be an ideal way of regaining control of your finances. Debt consolidation services are designed to help get you back on your feet quickly.  Although the specifics vary depending on the nature and extent of your financial troubles as well as the credit counseling company you sign up with, most debt consolidation services operate in the same way.  The credit counselors will review the details of your financial picture and explain if, how, and where they can save you money.  If you like what you hear and if you agree to pay the fees they charge for their debt consolidation services, the company will go to work on your case.

How long does this program take to clear all my debts?

It takes approximately 36-60 months to repay debts through a Debt Management Plan. Your accounts with creditors will always be credited with 100% of the amount you pay through us, and we'll work with all of your creditors, regardless of whether they contribute to the agency. Our DMP serves the dual role of helping you repay your debts while creditors receive the money owed to them. For those with considerable debt problems, entering into our Debt Management Plan is an effective first step on the road to a financially stable, debt-free life. The duration of a DMP depends on the amount and type of debt you owe and the monthly installment that you can afford. However, normally it takes about 3-5 years.
If a person agrees to make bigger deposits every month, it is most likely that he will become debt free in a shorter time. He may even end up paying a lesser amount if he can pay off quickly. A prolonged payment plan is never advised by a consultant. Nevertheless, if an individual is unable to pay large sums of money in his monthly installments, he will have to follow the prolonged payment plan.

How much will I be charged for a Debt Management Plan?

Usually the Debt Management companies offer you free service. Instead they earn their service charges from the creditors. The consultant gets a small portion of the total amount that the debtor returns to the creditor. This is the only service charge that a debt consultant gets. Apart from this there is no other charge involved. If you are paying through a DMP, contact your creditors and confirm that they have accepted the proposed plan before you send any payments to the organization handling your DMP. Once the creditors have accepted the DMP, it is important to:

• make regular, timely payments.
• always read your monthly statements promptly to make sure your creditors are getting paid according to your plan.

• contact the organization responsible for your DMP if you will be unable to make a scheduled payment, or if you discover that creditors are not being paid.

You need to be aware that if payments to your DMP and creditors are not made on time, you could lose the progress you’ve made on paying down your debt, or the benefits of being in a DMP, including lower interest rates and fee waivers. Although creditors may have forgiven late payments that you made before you began the DMP, the creditors may be unwilling or unable to do so if payments are late after you have enrolled in a DMP. If you fall behind on your payments, you may not be able to have your accounts “re-aged” again (reported as current), even if you start a new DMP with a new counselor. That means your credit report will have “late” marks and you will rack up late fees, which, in turn, will lead to more debt that could take longer to pay off.

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