SUGAR LAND, Texas, April 29, 2013 /PRNewswire-USNewswire/ -- There's something very satisfying about completing DIY (do-it-yourself) projects. You've accomplished something that an expert or professional would normally do for you and you've saved yourself some money in the process. For those with a knack for DIY and an unhealthy amount of debt, it may be time to consider putting together a "do-it-yourself debt management plan."
What's a debt management plan?
A debt management plan, or DMP, is a structured repayment plan designed to pay off unsecured debt within a certain time period, generally 36 months.
The credit counselors at nonprofit credit counseling agencies, like Money Management International (MMI), work with consumers to assess their current financial situation and might suggest a DMP if it's the most beneficial option when compared to other debt repayment solutions. There are several benefits to enrolling in a DMP through a certified credit counseling agency, but if you're inclined to make a go of it on your own, here are the steps you'll need to take.
- Create a realistic plan. Start by listing all of your unsecured debt, noting the credit issuer, total balance, minimum payment and interest rate. Next, review your monthly budget to determine a realistic monthly DMP payment, ensuring at least the minimum payment for each account.
- Contact your creditors. One of the major keys to a successful DMP is getting your creditors to reduce your interest rates and agree to a structured monthly payment. Some creditors offer internal hardship programs and some do not. Every creditor has different policies, so the only way to find out what each offers is to give them a call.
- Set up automated payments. Many creditors will require that you agree to automated payments as a condition of enrollment. Even if it isn't required, it can help prevent late or missed payments. In many cases a missed payment can cause you to default out of the program.
- Monitor your accounts. Errors do happen, so make sure you're checking your statements each month, paying close attention to your balance, payments made and monthly interest rate. If everything's gone well, your balances should be going down steadily.
- Stick to your budget. One of the incentives for creditors to offer you these reductions is that the debt must be paid in full within a set period of time (usually less than five years). This means that your debt is paid off quickly, but it also means that your monthly payments do not decrease as your balances go down. In order to navigate those payments and remain in good standing, you'll need a smart budget and a lot of willpower.
If a debt management plan sounds like it might benefit you, but you're not interested in the do-it-yourself version, or you're simply unsure of what you should do, consider speaking to one of our certified credit counselors. To learn more ways to end a bad relationship with debt, visit mmiurl.org/debtbreakup or speak to one of MMI's credit counselors at 866.400.6652.
About Money Management International
Money Management International (MMI) is a nonprofit, full-service credit-counseling agency, providing confidential financial guidance, financial education, counseling and debt management assistance to consumers since 1958. MMI helps consumers trim their expenses, develop a spending plan and repay debts. Counseling is available by appointment in branch offices and 24/7 by telephone and Internet. To learn more, visit MoneyManagement.org or call 866.400.6652
SOURCE Money Management International