Do I Need A Debt Management Plan?

Lower interest rates, structured repayment plan benefits can help consumers with serious debt problems

ATLANTA, Jan. 17, 2011 /PRNewswire-USNewswire/ -- For consumers struggling with debt, a Debt Management Plan (DMP) can provide the step-by-step plan to help get them back on sound financial ground. And with many creditors offering favorable repayment terms to consumers who enroll in a DMP, now might be the best time to tackle your debt.

"A Debt Management Plan is particularly helpful for consumers struggling to make even the minimum payment on their credit cards," said Vicki Williams, vice president of Debt Management Services for CredAbility. "Ultimately, the plan serves the dual purpose of helping consumers repay their debts and helping creditors receive the money owed to them."

Consumers who enroll in a Debt Management Plan (DMP) may receive interest rates ranging from 6% to 10% from many creditors.  Many people who opt for a DMP to repay their unsecured debt are prompted to seek help after late payments have caused their credit card interest rates to soar.

At CredAbility, certified counselors help consumers determine whether they can tackle their financial challenges through budgeting and reduced spending, or if the structure of a debt management plan will be more effective.

What is a Debt Management Plan?

A Debt Management Plan, or DMP, is a repayment plan that provides a systematic method for paying down your outstanding debt. For a small monthly fee, consumers make a single payment to an agency like CredAbility, which acts as a trustee in distributing the funds to creditors. CredAbility works with both clients and creditors to design a debt repayment program that minimizes monthly payments, interest and related fees, providing a manageable tailored plan for the client. This enables the client to repay their entire debt obligation at more favorable terms, and on a plan that is within their ability to pay.

The repayment period varies based on amount owed and the repayment terms. The average debt management plan is structured to repay debt in 36-60 months.

Do I Need a Debt Management Plan?

Debt can quickly become overwhelming if you ignore the warning signs. Look for these warning signs and take action to avoid compounding the problem.

• Using credit cards to cover daily living expenses.
• Making only minimum payments on credit cards; or struggling to make even minimum payments.
• Carrying multiple credit cards and rotating their use to juggle balances and due dates.
• Making payments late or missing payments for more than one month.
• Charging more each month on your credit cards than you are paying toward the balance.
• Credit cards that are at or close to their limit.
• Not knowing how much you owe.
• Calls from creditors.
• Taking out loans or using equity in your home to pay off debt.
• An interruption in income would cause immediate difficulty paying bills.

"Ignoring the problem won't make it go away," said Williams. "Getting help at the first sign of trouble can make the difference between a financial setback and a financial disaster."

Get Help

The key to reclaiming your financial independence is recognizing the need for help and getting it. At CredAbility, certified counselors will help you evaluate your financial situation and find the solution that best suits you. For more information on Debt Management Plans or to talk with a certified counselor about your options for a debt free life, contact CredAbility at 1-800-251-2227 or online at www.CredAbility.org.  

About CredAbility

CredAbility is one of the leading nonprofit credit counseling and education agencies in the United States, serving clients in all 50 states plus the District of Columbia, Guam, Puerto Rico and the US Virgin Islands, in both English and Spanish. In addition, we provide in-person counseling through our branch network of 31 offices located across the southeast.

Founded in 1964, CredAbility is a family of Consumer Credit Counseling Service agencies that includes CCCS of Greater Atlanta, CCCS of Central Florida and the Florida Gulf Coast, CCCS of Palm Beach County and the Treasure Coast, CCCS of East Tennessee, CCCS of Jackson (Mississippi) and CCCS of Upstate South Carolina.

The nonprofit agency is accredited by the Council on Accreditation and is a member of the Better Business Bureau and the National Foundation for Credit Counseling (NFCC). Governed by a community-based board of directors, CredAbility is funded by creditors, clients, individual donors and grants from foundations, businesses and government agencies. Service is provided 24/7 by phone at 800.251.2227 and online at www.CredAbility.org

SOURCE CredAbility